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Glencore plans to sell at least 55% of Enex Resources, formerly Glencore Coal Holdings, which it described as the world's largest pure coal exporter and one of the three largest suppliers of seaborne thermal coal, used for energy generation.
Enex has been an active acquirer since 1994, and currently owns 11 mines in Australia and 14 in South Africa, producing 40 million tonnes of thermal coal in 2000.
Glencore CE-elect Ivan Glasenberg told a briefing the share offer followed intense consolidation within the industry.
Four major companies - BHP Billiton, Rio Tinto, Anglo American (share code: AGL) and Enex - now control 74% of coal assets in Australia, South Africa and Colombia.
Demand for coal was expected to grow by 30% between 2000 and 2005, he said.
Enex CE Peter Coates said the industry had also benefitted from the change from a traditional supply-driven marketplace to a demand-driven market.
"There's strong growing demand for coal in Asia, increased imports into Europe and a US market that has traditionally been a net exporter now becoming a net importer, and all of this underpinned by consolidation," Coates told the briefing.
Duiker an acquisition prospect
The prospectus set a retail application price of $5.00 a share and an indicative price range for the institutional bookbuild of $4.00 to $5.00 a share, giving Enex a market capitalisation of $3.3bn to $4.2bn.
This would put it among Australia's 40 biggest companies.
Enex forecast revenues of $2.7bn and earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.2bn for 2002.
Based on these forecasts, it projected a price/earnings ratio of 5.4 to 6.8 times and a dividend yield of 7.4% to 9.2% fully-franked for 2002, on a projected payout of 37c a share.
Enex said it intended to use the net proceeds of the offer of $1.74bn, together with additional debt facilities and cash, to acquire South African coal mine Duiker from companies ultimately owned by Glencore International.
It would also pursue asset swap agreements with other thermal coal producers in Australia and South Africa and was considering acquisitions in other countries such as Colombia.
"We have the management strength and financial position to pursue further acquisitions," Coates said.
The retail offer opens on August 20, and closes on September 12, with joint global co-ordinators Credit Suisse First Boston and Deutsche Bank. The institutional bookbuild opens September 4 and closes on September 14.
Glencore can sell up to 72.5% of Enex if an over-allotment option is exercised in full.
