Interesting hairy as both views are quite achieve able...I had a...

Interesting hairy as both views are quite achieve able...

I had a brouse on the Asx cok thread, the seem to be making headway..

And a article I pinched from them...Some things are relevant to CCc..


THE market has big questions over mining billionaire Nathan Tinkler's $5.3 billion move on Whitehaven Coal, which would reduce the number of listed coal plays on the stockmarket.

The coal bull, who tipped his mining assets into Whitehaven in a $2.25bn deal and then lobbed his intention to take over the miner two months after that transaction was completed, is hoping to take Whitehaven private.

Analysts say the $5.3bn bid for the coalminer looks shaky until funding for the deal can be confirmed, but despite the negative view on the bid they agree it highlights the continuation of consolidation in the space at a time where equity markets are weak.

The Tinkler Group's offer of $5.20 a share is subject to a four-week due-diligence period and a firm commitment of debt funds.

Shares in the miner have continued to trade significantly lower than the bid price and fell 3.19 per cent yesterday to close at $3.94, as doubts remained over Mr Tinkler's ability to fund the deal.
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He has already secured support from 48.3 per cent of Whitehaven investors, who will roll their shares into the new private vehicle.

The deal also includes the option for another 16.7 per cent of shareholders to roll their shares into the Tinkler Group-led bidding vehicle, but that offer has raised eyebrows in the market, with some saying it is an indication Mr Tinkler has about an $880 million funding shortfall.

But the Tinkler camp said the market had always been sceptical of any deals he was involved in and had always been proven wrong, adding that the 16.7 per cent was only an option and the deal did not depend on it.

Should Mr Tinkler prove the market wrong again and succeed with yet another ambitious deal, it will see Australia's largest independent coal play delist from the Australian Securities Exchange, leaving investors with few options for pure coal investments.

More than $30bn in deals has been completed in Australia's coal sector in the past 18 months, resulting in many of the large-cap ASX-listed coal companies disappearing off the boards.

Merrill Lynch analyst Peter O'Connor said consolidation of ownership in the coal industry, including both listed and unlisted firms, was nothing new.

"It has been a real and continuing thematic in the industry over the past four decades, with cycles of ownership consolidation followed by fragmentation," he said.

There were now only seven listed producing coal pure plays, compared with 14 a year ago.

Foster Stockbroking analyst Craig Brown said Mr Tinkler's proposal would lead to emerging producers stepping up to offer replacement exposure for investors.

"While we acknowledge that not all coal assets will be crystallised, there are a number of recent transactions in the coal space, some comprising developers, that indicate both demand by customers and interests by corporates are still strong for undervalued quality projects and companies," he said.

Mr Brown listed Nucoal Resources, Bandanna Energy and Acacia Coal, which all have their assets in Australia, as the most advanced in the smaller space.

"We believe these will end up taking replacement exposure to coal on the ASX from the larger producers," he said.

One respected mining analyst said he would be "mortified" if Whitehaven disappeared, but that the recent spate of consolidation was evolutionary and a similar cycle had occurred in the mid-2000s.

"It seems to be the way of the world with our coal space," he said. "We bring them on, they grow to a meaningful point and then someone seems to snaffle them up."

There has been a series of multi-billion-dollar buyouts over the past year, including the Peabody Energy $5bn takeover of Macarthur Coal and the joint bid by Rio Tinto and Japan's Mitsubishi for full control of Coal & Allied Industries, which valued that target at $11bn.

Two of the larger Australian-listed producers are New Hope Coal and Yancoal, but both have limited free-float, meaning the next investment options are in the explorer-developer space.

Along with coal stocks listed by Mr Brown, Stanmore Coal and Cockatoo Coal are among the smaller coal companies analysts tip to watch.

But their share prices have all been belted along with the rest of mining stocks, lowering their market capitalisations to less than $300m.

"No large-cap fund managers would look at them," one analyst said.

"It is access to capital that could be a problem for the companies, as most of the juniors need to raise money at some point.

"It is a challenge for juniors to be raising money for what is ultimately big projects and, in some instances, beyond the scope of the juniors."