News: Yancoal Australia looks to raise $2.5 bln to pay for Rio Tinto coal mines

SYDNEY, Aug 2 (Reuters) - Yancoal Australia Ltd (YAL) said on Wednesday it will look to raise $2.5 billion from investors to acquire the Coal & Allied division of Rio Tinto (RIO) .

Yancoal won a bidding war against commodities giant Glencore PLC by agreeing on a price of $2.69 billion for Coal & Allied. It subsequently announced a deal to sell on a major component of the business to Glencore.

The miner will conduct a rights offer priced at $0.10 per new share. Yancoal shares closed 40 percent lower at A$0.25.

The deal could give Yancoal, majority-owned by Chinese coal giant Yanzhou Coal Mining Co Ltd <600188.SS>, majority interests in three of the 10 largest thermal coal collieries in Australia.

Yanzhou will subscribe to $1 billion worth of the rights offer, while Glencore will account for $300 million, according to Yancoal.

Glencore is also buying 16.6 percent of a Coal & Allied Hunter Valley Operations mine from Yancoal and 32.4 percent from Mitsubishi Corp <8058.T>.

Glencore coal chief Peter Freyberg told reporters on Wednesday he was confident Yancoal would raise the funds needed to complete the deal.