• A battle is brewing over a debt-ridden tiddler in control of a Hunter Valley coal mine
  • The three cornered contest between Nick Paspaley and John Robinson’s Trepang, Nathan Tinkler’s Nakevo and coal trader M Resources has devolved into a flash attempt to raise $100 million and attempt to spill the company’s board
  • Newcastle thermal coal is at record highs above US$400/t

 

The return of Nathan Tinkler to the Australian coal scene has stirred an even more fascinating contest for control of a distressed coal tiddler, as corporate raiders circle a rare asset in the hopes of capitalising on the great 2022 coal boom.

Trepang Services, owner of $65 million of debt issued to Australian Pacific Coal (ASX:AQC), and its backers Nick Paspaley and John “Foxy” Robinson thought they had this one in the bag.

They had a deal on the table back in February to take the shuttered Dartbrook coal mine off AQC’s troubled hands which would rid AQC of its debt but see its shareholders left with only a royalty to show for their travails.

A shareholder meeting to approve the deal was supposed to take place on August 22.

In walks Nathan Tinkler, back in business after the collapse of his own coal empire several years ago, with Nakevo, an entity also backed by Evolution Capital and other investors, which promises a 30c per share offer and refinancing package that would see the Newcastle mining mogul make a triumphant return as AQC’s executive chairman.

We’re not done yet.

Next to enter the scene is coal trader and operator M Resources, the largest shareholder in Nick Jorss-chaired Bowen Coal (ASX:BCB) and a significant shareholder in Stanmore Resources (ASX:SMR).

It offers 36c a share, equivalent to $18.2m and a whopping 167% premium to AQC’s closing share price of 13.5c on August 19, the last trading day before the Tinkler bid lobbed.

 

Here’s the kicker

Trepang, Paspaley, Robinson et. al. (once aligned with Tinkler in AQC before his since annulled bankruptcy in 2016) aren’t happy.

They’re not getting into any deals to refinance the debt they hold, and terminated their deal before AQC could convene the EGM to vote on it.

The issue for AQC is they can now call in that mountain of debt.

AQC’s response is a $100 million, 5.83 for 1 rights issue and “potential strategic partnership” with Matthew Latimore’s M Resources “with respect to a proposed 50:50 JV to operate Dartbrook.

M has committed to sub-underwrite the raising to the tune of $10 million, and has received exclusive due diligence rights for the next 28 days was what remains a non-binding proposal.

There are more fireworks to come though. What are those you say?

Well a 249D notice has lobbed at AQC’s doorstep as well from none other than Trepang Services.

What do they want? Only to remove CEO David Conry and other directors Craig McPherson and Tony Lalor from the AQC board to be replaced by Brian MacDonald, Leon George “Trey” Jackson III and Michael Mapp.

AQC is back trading after over a week in a trading halt and was down 4.1% at 4.15pm AEST.

What a ride it’s been so far.

 

 

Australian Pacific Coal (ASX:AQC) share price today:

 

 

 

What makes coal so lovable?

Capital markets have spent years shunning investments in coal, oil and gas on ESG grounds.

But segments of the investment community love the dirty old fossil fuels right now with an obsession rivalling TikTok’s current love of corn.

Thanks to Russia’s invasion of Ukraine and a shortage of immediately available energy globally, thermal coal through the Port of Newcastle near Dartbrook is trading for upwards of US$400/t.

With companies mining at under $100/t, those margins have turned loss making coal miners into some of the most profitable companies on the ASX, wiping out billions in debt along the way.

Many have prospered by hoovering up assets going on the cheap in the down times and milking them during the current crisis for extreme profits.

Big diversified miners with large institutional investor bases are unlikely to want these assets, with intense pressure on companies like BHP, Rio Tinto and South32 to wind down their coal assets and transition to metals associated with decarbonisation like copper and nickel.

If current prices, or even prices US$200 lower, persist, assets like Dartbrook could become bargain buys for companies comfortable with coal within or at the forefront of their portfolios.

On cue, in a dour day for miners on the ASX, Yancoal (ASX:YAL) and New Hope Corp (ASX:NHC) were two of the stronger performers, up 4.06% and 2% respectively.

 

 

Yancoal (ASX:YAL), New Hope Corp (ASX:NHC), Stanmore (ASX:SMR) and Bowen Coal (ASX:BCB) share prices today:

 

 

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