BHP Billiton and Xstrata Bids for Queensland Rail

Submitted by Jim Thesiger on 26 May, 2010 - 14:57

Queensland Coal has received a takeover bid that worth $4.85 billion from a consortium of coal miners which includes BHP Billiton (BHP) and Xstrata for its track network. The proposal has been made to trump a plan by the government of Queensland to float the coal and bulk freight assets of Queensland Rail by the end of 2010 under the banner of a new company named as QR National. It is to be mentioned that the Queensland Coal Industry Rail Group (QCIRG) is formed by as many as 13 coal miners. Among them, Anglo American Metallurgical Coal, BHP Billiton, Ensham Resources, Felix Resources, Jellinbah Resources, Macarthur Coal, Peabody Energy, Rio Tinto Coal, Vale Australia, Wesfarmers Resources and Xstrata Coal have signed on the equity subscription agreements.

According to Nick Greiner, the chairman of QCIRG the cash offer was submitted to the Government today. In a statement, Mr. Greiner included that, the proposal has included a significant level of premium, something that can possibly be achieved under the IPO proposed by the Government or has been realised in the latest comparable transactions. The bid can be settled with the Queensland Government prior to the IPO, something which is not going to be dependent on the unstable equity markets. This is going to eliminate a substantial amount of risk for the state and at the same time will be able to come up with an early settlement, he added.

Mr. Greiner claimed that the proposal would boost open access and will optimise network performance, allowing the early system expansions. The plan also includes a new facility for financing the existing QR capital works plan and include new capacity for the rail. It is to be mentioned that QCIRG has managed to secure an acquisition facility worth of as much as $1.35 billion which was underwritten by ANZ, BNP Paribas and Citibank N.A.