October 19, 2018 / 11:01 AM / a month ago

UPDATE 1-U.S. private equity-owned Coronado cuts IPO size, raises about $550 mln - sources

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By Paulina Duran

SYDNEY, Oct 19 (Reuters) - U.S. private equity firm Energy and Minerals Group (EMG) has cut the size of the Australian IPO of its coal miner Coronado Global Resources and priced it at the bottom of the offered range, two people familiar with the matter told Reuters.

Shares in Coronado were priced at A$4.00 each and the IPO was cut to 20 percent of the company, the sources said, raising about A$773 million ($550 million). EMG had aimed to sell a stake of up to 30 percent in the initial public offering at a price between A$4.00 and A$4.80 per share.

"The Coronado Global Resources book build closed today and is well covered," a spokeswoman for the company said. "No further information will be provided at this stage."

The IPO gives the company an enterprise value of about A$3.86 billion, making it the biggest coal mining float in Australia since Yancoal Australia listed in 2012 at the peak of the country's mining boom.

Coronado mainly produces metallurgical coal with annual output of 8.2 million tonnes from three U.S. mines and 8.5 million tonnes from the Curragh mine in Australia, which it bought from Wesfarmers Ltd in December for A$700 million.

That makes it one of the biggest metallurgical coal producers outside the big diversified miners, competing with U.S. firm Warrior Met Coal Inc.

It also produces 3.5 million tonnes a year of steaming coal, used for energy generation, at Curragh, which it sells to the Queensland state government's power producer Stanwell Corp.

Metallurgical coal prices are back where they were at the start of the year at around $195 a tonne, having jumped by 20 percent from the start of August when they plumbed a nine-month low.

But according to the IPO prospectus, metallurgical coal prices are expected to decline in coming years due to new coal supply and lower Chinese demand.

The proceeds from the IPO will be used to repay debt and will help the private equity firm realise part of its investments. ($1 = 1.4049 Australian dollars) (Reporting by Paulina Duran; Editing by Christopher Cushing and Kevin Liffey)

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