PERTH (miningweekly.com) – Chinese-owned miner Yancoal, which operates mines across Australia, on Monday announced a subordinated capital note offering in which it hoped to raise as much as $2.3-billion.

The company would offer 2.32 subordinate capital notes for every 100 shares held, with the company’s largest shareholder, Yanzhou Coal Mining, committed to subscribing for its full entitlement under the offer, amounting to about $1.8-billion.

Yanzhou has further agreed to provide up to A$1.4-billion in additional finance support, as well as additional finance support to fund the distribution of the subordinated capital notes over a five-year period, post issuance. The funding was conditional upon the offer proceeding.

ASX-listed Yancoal has been stuck in a rut since Yanzhou in March abandoned a privatisation bid for the Australian coal miner, under which it would have acquired the outstanding 22% of the company.

Yancoal was also struck by an accident at its Austar coal mine, in New South Wales, in April, which claimed the lives of two employees.

“Yancoal continues to take the necessary steps to reduce its gearing, improve operational efficiencies and deliver significant cost savings to weather the challenges of an increasingly competitive marketplace,” said CEO Reinhold Schmidt.

“The offer of subordinated capital notes to raise around $2.3-billion will strengthen our balance sheet and may secure funding to pursue future growth opportunities.”

Schmidt pointed out that some $1.8-billion of the proceeds would be used to repay existing senior debt, while the Bank of China and China Construction Bank would provide an extension to the repayment of their $2.6-billion syndicated facility for three years, conditional upon the offer proceeding.

Meanwhile, the remaining proceeds from the raising would be used to part-fund Yancoal’s existing coal operations and further growth projects, including the start of the Moolarben Stage 2 project, which was currently pending final approvals.

The offer was expected to close, and the subordinated capital notes to be issued, before the end of the year.