Published 1:18 PM, 3 Jun 2011 Last update 3:03 PM, 3 Jun 2011
Reuters
Startup mining company Resourcehouse, controlled by billionaire Clive Palmer, slashed the price for its Hong Kong IPO by up to 30 per cent after investors balked at paying top dollar to develop its Australian coal and iron ore projects.
Resourcehouse Ltd cut the proposed price to $HK3.45 per share from a previous indicative range of $HK4.48 to $HK4.93, according to a term sheet for the deal seen by Reuters. The change reflects "investor feedback and overall market conditions" the term sheet said.
Concerns about higher interest rates in China, debt troubles in Europe and a possible sovereign downgrade in the United States have roiled global markets, pushing commodity prices sharply lower in recent weeks.
"Overall market conditions are not favourable," Cheer Pearl Investment executive director Alfred Chan said. "So they have to be realistic."
Resourcehouse, which is raising funds to develop a thermal coal project in Queensland and an iron ore project in Western Australia, was set to launch the IPO on Thursday last week but delayed it by four days without giving an explanation.
The company postponed a roadshow in March, citing unfavorable market conditions, after previous attempts in 2009 and 2010 to go public.
Mr Palmer said on Sunday that the company had received a "very good response" from investors in the United States and Europe and had no plans to change the IPO terms or cut the offering, despite volatility in global commodity prices.
Glencore, the world's largest commodities trader, has largely traded below its IPO price since going public in Hong Kong and London with a $US10 billion ($A9.75 billion) deal last month.
The IPO would raise as much as $US2.54 billion, compared with up to $US3.6 billion previously. As a result, Resourcehouse aims to use all the funds to develop its China First Coal Project in central Queensland in Australia, with output capacity targeted at 40 million tons a year.
The company is looking for alternatives to finance its China First Iron Ore project, including raising more funds from debt, attracting strategic equity investments and asking for upfront payment on ore deliveries.
Resourcehouse originally planned to use 22 per cent of the IPO proceeds for the iron ore project.
The company was unable to cover the retail and institutional books for the IPO at the initial price range and considered lowering the price or withdrawing the planned listing, Ming Pao newspaper said, citing no sources for the information.
ARH Price at posting:
34.0¢ Sentiment: None Disclosure: Not Held
