Coal news and updates

Aussie company lines up cheaper debt to weather coal slump

Australia's Whitehaven Coal lined up a A$1.4 billion ($1 billion) bank loan on Thursday, replacing a slightly smaller facility and cutting its interest costs to give it more breathing room to withstand weak coal prices.

Investors had been anxious to see Whitehaven refinance a A$1.2 billion debt facility that helped fund construction of its flagship Maules Creek mine, fearing that with coal prices stuck at six-year lows the company would have been unable to meet its debt covenants when they were due to kick in in 2016.

"You've got to view this as positive," said Deutsche Bank analyst Paul Young.

Whitehaven's shares jumped 8 percent, outpacing a 0.3 percent climb in the broader market.

Cheaper debt, an improving mix of premium coal due to the Maules Creek mine, falling operating costs and a weaker Australian dollar, had all improved Whitehaven's prospects, Young said.

The new loan, arranged by a syndicate of Australian and international banks, will be used to pay down the previous debt facility led by Australia and New Zealand Banking Group .

Whitehaven Chief Executive Paul Flynn said the new loan was flexible and low cost, without revealing any details.

"It demonstrates Whitehaven's improved creditworthiness and the increased confidence that lenders have in our growth plans and in our capacity to execute them ahead of expectations," he said in a statement.

The new interest rate is more than 100 basis points cheaper than the earlier facility, and the covenant breather will expire in 2017, pushed out from December 2015, a person familiar with the terms said.

Maules Creek started producing earlier this year and is expected to be operating at 6 million tonnes a year from this month.

($1 = 1.3180 Australian dollars)

source: http://in.reuters.com