Coalminers' bid for QR runs out of puff Matt Chambers, Andrew Main From: The Australian September 11, 2010 12:00AM
QUEENSLAND coalminers trying to block the float of QR National were set to deliver a $5.2 billion cash bid for the state's coal railway track.
However, Anglo American pulled the pin on the offer at the last minute.
It is understood the miners were not prepared to accept the Bligh government's demand for an unconditional bid.
But they had planned to offer $5.2bn, a price the government had asked for, conditional on Australian Competition and Consumer Commission approval.
Other members of the Queensland Coal Industry Rail Group are privately seething at Anglo's Wednesday decision to drop from a 13 per cent equity stake to a 1 per cent stake, which they say threw the bid into disarray and gave no time for others to take up the shortfall.
The decision is understood to have come after Anglo's London head office on Tuesday said the deal was too risky for the price being considered. The other nine miners in the group were told on Wednesday, but could not move quickly enough to take up the shortfall by the Friday deadline the government had set.
Sources close to the process said BHP Billiton and Xstrata -- which would have been the biggest members of the float -- had indicated they were keen to lift their stake. Yesterday, Anglo coal chief Seamus French defended the decision.
"Anglo American has stringent governance requirements for investment decisions," Mr French said.
"Anglo American's decision was consistent with a majority view of the consortium resulting in no conforming bid being lodged," he said.
Mr French said Anglo was a founding member of the consortium and remained committed to coal industry ownership of the coal haulage track network.
The coalminers have not given up their fight to stop the $4bn QR float, which they believe will inhibit the state's coal rail and port expansions, but an alternative plan is yet to emerge.
The ball is now in the government's court, with all eyes on whether it can successfully float the business in an initial public offering market that has been running cold.
Fund managers are still mostly sitting tight on their opinions of QR until they see details of the float's pricing.
One noted that overseas fund managers might be more interested in taking full control of assets, pointing to Genesee & Wyoming's decision mid-year to pay $334 million to receiver Korda Mentha for the 2250km of near-new railway linking Tarcoola (near Adelaide) with Darwin, plus 23 locomotives and 430 rail cars.
Just the Alice Springs to Darwin element alone had cost $1.2bn to build between 2001 and 2003.
Local fund manager Denis Donohue, managing director of mid-size fund manager Solaris in Brisbane, said the QR float would almost certainly be sold as a growth story, based on getting improved returns from what had been a state-owned network.
"It wasn't managed for a return on capital," he said, noting that the coal-focused network had been maintained to a high standard by a state government used to offsetting network maintenance costs with the significant royalties it collected from the exporters.
