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Aurizon, consortium, in talks for WICET and assets
Posted on Tuesday, 14 November 2017 12:28
Australia’s largest rail freight operator is in discussions to acquire Wiggins Island Coal Export Terminal (WICET) as part of a restructuring proposal whereby other consortium members may pick up some of the coal port’s source mines.
The statement by Aurizon Holdings yesterday confirmed recent speculation that it was making a play to add another growth string to its bow which already includes the locomotive network that carries coal into the port.
Morgans Stockbroking analyst, Nathan Lead, told Reuters it is a strategically sensible move considering the company already provides the logistics into the terminal, so an acquisition would merely be a vertical integration.
While Aurizon has kept its cards close to its chest regarding which other companies are participating in the discussion, the media is reporting Macquarie and Canadian investor Brookfield are two of the members.
It is believed the two are proposing to acquire some of the port’s biggest contracted customers, namely the Rolleston and Curragh mines owned by Glencore and Wesfarmers, respectively.
WICET is currently held by a consortium of Australian and international resources companies that include these two aforementioned groups, as well as Aquila Resources, New Hope and Yancoal, according to the website.
At the moment these partners are staring down the barrel at a debt pile of more than AUD 3.50 billion (USD 2.67 billion), which is running towards a September 2018 repayment deadline.
The Australian Financial Review’s Street Talk column noted that if a deal is not reached, banks such as ANZ and NAB could face some of the largest writedowns in Australia’s corporate history.
Despite being laden with debt, WICET seems to be an attractive investment; after all, it provides as much as 27.00 million tons of coal export capacity a year, which includes some 16.00 million tons under long-term agreements, the website shows.
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