Fed govt approves Yanzhou takeover of Felix Resources(2nd wrap)
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AAP
October 23 2009, 6:34PM
By Rebecca Le May
PERTH, Oct 23 AAP - The largest Chinese takeover of an Australian company is a step closer to fruition after the federal government approved Yanzhou Coal Mining Company Ltd's proposed $3.54 billion acquisition of coal miner Felix Resources Ltd.
Assistant Treasurer Nick Sherry approved Yanzhou's application to acquire Felix, subject to it complying with legally enforceable conditions.
The conditions apply to all of its operations, including the Austar mine near Newcastle in New South Wales that Yanzhou already owns.
For the transaction to proceed, the majority of both Yanzhou and Felix shareholders must approve the proposal.
Yanzhou will hold an extraordinary general meeting to vote on the matter, scheduled for October 30, and Felix shareholders will have their say at a scheme meeting on December 8.
Yanzhou also requires Chinese regulatory consents from the National Development and Reform Commission, and Shandong state-owned Assets Supervision and Administration Commission.
Senator Sherry on Friday said this would be the first time a Chinese state-owned enterprise operating in Australia would list on the domestic bourse but it must be as an Australian incorporated and headquartered company.
The firm, to be named Yancoal Australia Pty Ltd, is slated to be listed on the Australian stock exchange by the end of 2012.
By that time, Yanzhou must have reduced its ownership of Yancoal to less than 70 per cent.
Yanzhou's economic ownership of the underlying mining assets must be no more than 50 per cent following the listing and sell down, as several of the mines operated by Felix are joint ventures with third-party companies.
Yancoal must use a predominately Australian management and sales team, and hold the majority of its board meetings in Australia.
Other conditions include the chief executive and chief financial officer having their principal place of residence in Australia.
Also, the Chinese firm must market coal produced at all of its Australian mines on arms-length terms with reference to international benchmarks.
"With these undertakings provided by Yanzhou, I consider that this acquisition is consistent with Australia's national interest," Senator Sherry said in a statement.
Yanzhou said in a statement that it was pleased with Senator Sherry's decision, describing it as a "a win-win outcome, achieving significant economic and employment benefits for Australia".
Felix has three producing mines in NSW and Queensland, plus the Moolarben mine under development in the Hunter Valley.
Its independent expert, Deloitte, last month found the fair market value of the company to be between $3.3 billion and $3.7 billion.
Shares in Felix closed five cents lower at $16.75 on Friday.
