Ann: Convertible Notes Offering, page-37

The more i think about this, I reckon there is a play here for Malabar.

Following the equity raise in Feb 24, Malabar has 603 million shares on issue. NHC already own 19.9% (120 million shares), so there are 483 million shares owned by others. The raise was at $1.80. I reckon they would need to pay $3.50 / share to get a deal over the line. That would give Malabar shareholders a ~100% return in 6 months (i am a Malabar shareholder and would expect nothing less than this given my NPV for Malabar is north of $4/share).

$3.50 x 483 million shares = $1.7 billion cash. Malabar held $550 million cash at Feb 24. Lets say they have about $400 million left today. So net cash required to buy out Malabar is $1.3 billion.

Cash available to NHC:
$480m at Jan 24 (per accounts) + $300m convertible note + say $200m cash generation since Jan 24 = $1 billion.

So, they could structure a deal to work multiple ways such as:

• take 80% instead of the whole lot
• Include deferred payment component (e.g. $1 billion now + $300m in a year)
• Get some vanilla bank debt

Malabar is a sensational strategic fit:

• Across the road from Bengalla
• Low cost, long life mine
• predominantly met coal to diversify exposure

NHC said at the half year that they will use surplus cash to "expand Acland 3 and potentially also M&A opportunities aligned to strategy".