3rd UPDATE: Aston Resources IPO Share Price Slashed - Source
August 06 2010 - 2:40AM
Dow Jones News
The price of coal group Aston Resources Ltd.'s initial public
offering was slashed 27% Friday to attract more investors, a person
familiar with the matter said, as investment bankers continue to
grapple with how to price floats in the still volatile Australian
market.
Aston secured the A$400 million of subscriptions needed for its
initial public offering through a book build at A$5.96 a share,
down from the A$8.20 price the shares were being marketed at
earlier this week, the person said.
The company, controlled by founder Nathan Tinkler, had
originally sought to raise around A$400 million from an IPO and
list itself on the Australian Securities Exchange with a market
value of about A$1.5 billion, despite paying about a third of that
amount for its key asset less than a year ago.
Tinkler agreed last November to buy the Maules Creek coal
prospect from Rio Tinto Ltd. (RTP) for US$480 million at a time
when the diversified mining giant was continuing its divestment
strategy to shore up its balance sheet. Commodity prices at the
time, however, had recovered somewhat from the doldrums of late
2008 and early 2009.
The coal property, containing metallurgical and thermal coal, is
in the Gunnedah Basin in northern New South Wales state. It is yet
to be developed and access to rail and port facilities still need
to be finalized.
Tinkler intended to keep a near 40% interest in the newly listed
entity, and Asian commodities traders Noble Group Ltd. (N21.SG) and
Itochu Corp. (ITOCY) have agreed to become cornerstone investors in
Aston.
Presumably, the float was timed to capitalize on strong demand
for Australian coal assets, which have attracted takeover offers
together worth more than US$6 billion so far this year.
The Aston bookbuild, however, came at the same time that another
Australian coal company, Gloucester Coal Ltd. (GCL.AU), was
conducting a share issue, which potentially soaked up liquidity.
The Gloucester secondary offer came at a 26% discount.
Aston is also talking to a potential third-party investor, the
person said Thursday.
Its listing is the first major IPO to test the Australian market
since a few disappointing floats late last year left the primary
market all but shut.
Most recently, Bilfinger Berger AG (GBF.XE) was marketing its
Australian construction business to raise up to A$1.39 billion but
that deal, which was being viewed as a bellwether for the nation's
IPO market, was pulled last month because the group couldn't
achieve sufficient demand at its asking price.
The last large IPO, for department store Myer Group Holdings
(MYR.AU), is currently trading 15% below its offer price, compared
to a 0.2% rise in the broader market since Myer listed in
November.
It's been a different story in Australia's coal sector, where
company share prices have skyrocketed on takeover activity,
including Thai miner Banpu PCL's (BANPU.TH) bid for Centennial Coal
Co. (CEY.AU) and India's Adani Enterprises bid for a coal property
owned by Linc Energy Ltd. (LNC.AU).
The deal activity has been fueled by a gradual recovery in
commodity prices, continued projections of high long-term demand
for commodities from Asia, and new Australia's Prime Minister Julia
Gillard's decision to water down a proposed tax on miners.
-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692;
Ross.Kelly@dowjones.com
(Cynthia Koons in Sydney contributed to this article)
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