Coronado Launches IPO Seeking up to AU$1.3 Billion

In a groundshaking move, Coronado Global Resources is launching an initial public offering (IPO) set to raise up to AU$1.3 billion, putting the company on track to be Australia’s biggest coal float since the country’s mining boom peaked in 2012.

According to the company, the IPO’s shares will be priced between AU$4 and AU$4.80 a piece, giving the company an enterprise value of up to AU$4.4 billion. As Coronado opts to raise AU$1.3 billion, in return for a 30 percent share of the company, its receiving support from US private equity firm Energy and Minerals Group (EMG).

As EMG is the funding source behind the company’s IPO, it intends to remain involved with Coronado in the long-haul, according to chief executive Gerry Spindler.

“The funding source, EMG, intends to be a long-term holder. They have a reinvestment risk and they like the potential of the cash flow and the production expansion opportunities that are available for the company,” Spindler told Fairfax Media.

Meanwhile, the company’s chief financial officer Ayten Saridas told Fairfax that one of its key focuses going forward is distribution.

“The distribution policy we are stating is 60 to 100 percent of free cash flow, and those FCF numbers for 2018 are estimated at US$297 million and FY19 is US$347 million. From a dividend point of view, on a yield basis, it ends up being 10 to 12 percent,” Saridas said.

“However, from the offer date until December 2019 we are committed to paying out 100 percent of the free cash flow.”

Allegedly aiming to list on October 24, part of Coronado’s goal with the IPO is to jump on Asia’s steelmaking bandwagon as demand remains steady. Company chairman Greg Martin highlighted this venture in a statement obtained by Reuters.

“Demand from Asia for met coal, particularly from emerging economies, is expected to be strong and Coronado will be a key supplier to this growth market,” Martin said.

Between its three mines in the United States and the Curragh mine in Australia, Coronado sees an annual metallurgical coal output of 16.7 million tonnes, with over half being attributed to Curragh alone. The company also produces 3.5 million tonnes of steaming coal per year to be sold to Stanwell Corporation, the Queensland state government’s power producer.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.