The Australian B. Carter said 19.5.25
Coronado has $US194.9m of net debt, including a $US400m bond, and distress debt investors are said to be circling.
Should an aggressive hedge fund gain control of the loans at a discount, they are unlikely to offer the coal miner the time it needs to iron out its challenges, rather insisting on a debt for equity swap.
To avoid such an outcome, its 51 per cent private equity investor, Energy and Minerals Group, may opt to privatise the business [If so, will this reduce shareholders to zero$, a wipeout?]
It comes with talk that Sev.en is circling Coronado, but by acquiring the debt it could gain control for $US268m, the 67 per cent discount that the debt is trading at
[Will this be a debt for equity swap, which would cause massive dilution for CRN shareholders?]...
But when it no longer has to pay a burdensome royalty to the Queensland government-owned Stanwell Corp, which is costing it about
[US] $100m annually, it will be in a far better financial position.
From early 2027, Coronado will not have to sell the one million tonnes annually of thermal coal to Stanwell at a discounted rate for power, or share in proceeds from coal exports [Incorrect. CRN, from early 2027, will be required to sell Stanwell 2mtpa -not 3mt- '"thermal" coal, but at what price p/t? Still a huge discount to the market price?]...
However, also crimping Coronado’s profits is payment obligations to the Wiggins Island Coal Export Terminal from its subsidiary Coronado Curragh, one of the terminal’s shareholders. [How much pa?]
Industry experts believe shareholder EMG, despite being known as a seller out of the asset, may be the only place Coronado can turn to for support. The fund is cashed up and could benefit from the US exchange rate, and would unlikely let the business go at such an opportunistic price.
Another question is whether Sev.en would be able to raise the capital to buy Coronado. And although financiers such as White Oak, Ares Capital, Canyon Partners and Farallon Capital can provide more debt, it will come at a cost of about 3 to 5 per cent higher.
Coronado has $US325m of liquidity, comprising $US229m of cash, but it is more like $US225m when factoring in lender obligations to hold [$US] 100m on its balance sheet [I assume this means this US $100m is unavailable to CRN to pay off its various debts?]
Its $US424.4m of interest-bearing liabilities include a $US400m of senior secured notes with a 9.25 per cent interest rate".
Post #:79092034I am certainly no expert, but I believe the following issues are pertinent to CRN's future.
2. The above comments, highlighted in brackets, are mine.
Can anyone answer those questions?
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