Hedge fund Senrigan Capital presses for vote on US$2.3b Yancoal bond sale

A hedge fund asked Australia's Takeovers Panel to order Chinese-controlled Yancoal Australia to hold a vote on a planned US$2.3 billion bond sale in a bid to block Yancoal's parent Yanzhou Coal Mining from taking it over.

The move by Senrigan Capital and its founder Nick Taylor, who owns Yancoal shares, came two weeks after Yancoal, struggling amid a coal-price slump, announced plans to raise US$2.3 billion by selling convertible notes to shareholders, which could pave the way for Yanzhou to take it over.

Yanzhou, which owns 78 per cent of Yancoal, failed in an attempt earlier this year to buy out its subsidiary as the company's second-largest shareholder, Hong Kong-based trader Noble Group, pressed for a higher offer.

Under the planned notes offer, if Yanzhou converts its notes into shares and no other shareholders bought notes or converted them, Yanzhou would end up owning close to 99 per cent of Yancoal.

Senrigan Capital told the Takeovers Panel the rights offer was part of a strategy to enable Yanzhou to convert its notes into shares "so as to permit the compulsory acquisition of minorities cheaply", without seeking a shareholder vote, the panel quoted it as saying.

Senrigan wants the panel to order Yancoal to seek approval from shareholders, excluding Yanzhou, for the rights offer or order it to withdraw the offer and block it from doing any deal that would let shareholders who own more than 20 per cent to increase their stake without a shareholder vote.