Chinese miner, Yancoal has failed to attract significant interest in its bid for Coal & Allied according to the Australian Financial Review.
Yancoal announced yesterday that it has suffered another loss of $227 million between 2015 and 2016. This now totals $1.7 billion in losses over the past four years.
The company is also carrying significant debt of $5.7 billion, and has a debt to equity ratio five times larger than its major competitors.
With the AFR reporting that both Yancoal and its Chinese parent company Yanzhou “have pretty ugly credit ratings”, many mainstream banks have ruled themselves out of participating in funding rounds for acquisitions of this sort.
Prior to announcing the results, Yancoal executives were roadshowing their takeover bid to Asian investors. According to Financial Review, the commentary surrounding the bid declined as the roadshow continued.
As Yancoal’s latest financial woes were announced, the company attempted to pivot from discussions on entitlement offers and rights issues and claimed to be merely “testing the market’s appetite” for participating in the funding deal.
Investors appear to be rightly nervous following warning from industry sources that the potentially controversial deal will need to clear several regulatory hurdles.