The Coal Trader

Soul Patts checks out Whitehaven’s debt for $6.2B BHP coal buy

Washington H Soul Pattinson just can’t get enough of coal. Street Talk understands the ASX-listed conglomerate is in talks to join Whitehaven Coal’s debt stack for the latter’s $US4.1 billion ($6.4 billion) acquisition of BHP’s Blackwater and Daunia coal mines in Queensland.

Whitehaven initially used a $US900 million bridge loan provided by Bank of America and Jefferies to stitch up its winning bid, and now is seeking to bring in other lenders of which Soul Patts is expected to be one. A spokesperson for Whitehaven declined to comment.

Soul Patts’ interest in the debt is no surprise, given last year it tipped into the debt financing for Stanmore Resources’ $1.35 billion purchase of BHP’s 80 per cent stake in BHP Mitsui Coal, which owned Queensland’s Poitrel and South Walker Creek mines.

Nevertheless, it’s an interesting move. That’s because in the early days of the auction, New Hope – 39.2 per cent owned by Soul Patts – was tipped as a potential bidder for the Blackwater and Daunia operations. The miner refrained from tabling a bid, but clearly its largest shareholder likes the Blackwater and Daunia enough to come in as lender.

New Hope is the biggest exposure for Soul Patts, whose portfolio includes stakes in Brickworks, TPG Telecom – and then, on the smaller end – Aeris Resources, Apex Healthcare, and fund managers Pengana Capital and Milton Corporation.

It has been an active player in credit deals and had more than $650 million invested in its “structured yield” portfolio at June 30, across corporate loans, bonds and structured investments. This is where the latest deal is expected to sit, should it be completed.

As for Whitehaven, its winning bid – which saw it defeat BUMA Australia in the auction’s final leg – has been generally well received although UK hedge fund Bell Rock Capital has continued to agitate against the big M&A bet.