4th UPDATE: Aston Resources IPO Share Price Slashed By 27% - Sources
August 06 2010 - 5:27AM
Dow Jones News
Aston Resources Ltd. Friday secured enough commitments to move
forward with its A$400 million initial public offering, after
slashing the price on the shares on offer by 27% to get the deal
done, people familiar with the matter said.
The company is expected to release its prospectus Friday
evening, after completing what is called a "back-end bookbuild," in
which the underwriters secure institutional investor orders for the
deal before marketing the deal to retail investors, one person
close to the company said.
The deal is the first major IPO for the Australian market this
year, after the multi-billion float of department store Myer
Holdings Ltd. (MYR.AU) in November ended up being a disappointment
for investors and a few other deals which failed to perform well
post-IPO. Investors have been skeptical of how IPOs are priced in
Australia, leading German construction company Bilfinger Berger AG
to pull the up-to-A$1.39 billion IPO of its Australian arm,
Valemus, in July, sparking concerns about Aston's fate.
Aston, a coal company whose prospects hinge on one yet-to-be
developed mine, was being marketed earlier this week at A$8.20 a
share but that price ended up being cut to A$5.96, one person said.
The Aston bookbuild, however, came at the same time that another
Australian coal company, Gloucester Coal Ltd. (GCL.AU), was
conducting a share issue, which potentially soaked up liquidity.
The Gloucester secondary offer came at a 26% discount.
Presumably, the Aston float was timed to capitalize on strong
demand for Australian coal assets, which have attracted takeover
offers together worth more than US$6 billion so far this year.
Aston, controlled by founder Nathan Tinkler, had originally
sought to raise around A$400 million from an IPO and list itself on
the Australian Securities Exchange with a market value of about
A$1.5 billion, despite paying about a third of that amount for its
key asset less than a year ago. At the new share price, the company
will have an equity value of A$1.2 billion, one person said.
Tinkler agreed last November to buy the Maules Creek coal
prospect, the group's main asset, from Rio Tinto Ltd. (RTP) for
US$480 million at a time when the diversified mining giant was
continuing its divestment strategy to shore up its balance sheet.
Commodity prices at the time, however, had recovered somewhat from
the doldrums of late 2008 and early 2009.
The coal property, containing metallurgical and thermal coal, is
in the Gunnedah Basin in northern New South Wales state. It is yet
to be developed and access to rail and port facilities still need
to be finalized.
Tinkler will have a roughly 36% interest in the newly listed
entity, one person said, and Asian commodities traders Noble Group
Ltd. (N21.SG) and Itochu Corp. (ITOCY) have agreed to become
cornerstone investors in Aston. Noble has invested A$58.8 million
in the company while Itochu invested A$33 million, the person
said.
The group was looking to secure a third cornerstone investor
this week. The person said one investor was keen to invest $150
million in Aston but the company rejected the offer because it
would have given the investor a more than 10% holding in Aston and
the management team wanted to retain their independence.
While it has been challenging to get an IPO completed
domestically and the equities market is still jittery, the coal
sector is a rare bright spot in Australia. Company share prices
have skyrocketed on takeover activity, including Thai miner Banpu
PCL's (BANPU.TH) bid for Centennial Coal Co. (CEY.AU) and India's
Adani Enterprises bid for a coal property owned by Linc Energy Ltd.
(LNC.AU).
The deal activity has been fueled by a gradual recovery in
commodity prices, continued projections of high long-term demand
for commodities from Asia, and new Australia's Prime Minister Julia
Gillard's decision to water down a proposed tax on miners.
After the prospectus is lodged, a small amount of shares will be
marketed to retail investors for seven days, one person said. Aston
Resources will begin trading in the public market on Aug. 18 under
the ticker symbol AZT.
-By Ross Kelly and Cynthia Koons, Dow Jones Newswires;
61-2-8272-4691; Ross.Kelly@dowjones.com
Centennial Coal (ASX:CEY)
Historical Stock Chart
From Jul 2024 to Aug 2024
Centennial Coal (ASX:CEY)
Historical Stock Chart
From Aug 2023 to Aug 2024