Yancoal Australia provides a $1.3634 billion AUD loan to Watagan Mining Company for the acquisition of the Austar, Ashton and Donaldson coal mines

Project narrative

In 2015, Yancoal Australia Limited — an Australia-incorporated coal mining company majority owned by Chinese state-owned enterprise Yanzhou Coal Mining Company Limited — established a wholly owned subsidiary, Watagan Mining Company Pty Ltd. Then, on February 18, 2016, Yancoal Australia executed a Bond Subscription Agreement and other agreements that would transfer Yancoal Australia's 100% interest stakes in three of its New South Wales coal mines, the Austar, Ashton, and Donaldson coal mines, to Watagan Mining for a purchase price of $1.3634 billion AUD. In order to facilitate this purchase, on February 17, 2016, Yancoal Australia entered into a $1.3634 billion AUD loan facility agreement with Watagan. This loan carried a maturity period of approximately 10 years, a final maturity date of April 1, 2025, and an interest rate of BBSY plus a margin of 7.06%. Yankuang Group Co., Ltd. — the ultimate parent entity of Yancoal Australia via Yanzhou Coal Mining — issued a guarantee for the outstanding interest and principal loan of this loan. Watagan had the right to make prepayments on the outstanding loan balance at any amount, and Watagan had the right to redraw any amounts prepaid for future permitted purposes The transaction was completed on March 31, 2016, and Yancoal Australia lost control of Watagan that same day when Watagan issued $775 million USD of secured debt bonds to three bondholders. While these bondholders controlled Watagan, Yancoal remained the owner. As of June 30, 2018, the outstanding balance was $730 million AUD, redrawable to $1.363 billion AUD. As of November 18, 2018, the outstanding balance was $798 million AUD. As of December 31, 2018, $813 million AUD was the outstanding balance. As of December 31, 2019, $901 million AUD was the outstanding balance. Yancoal regained control of Watagan on December 16, 2020; the reconsolidation left Yancoal with a loss of $1.383 billion AUD. With it, Yancoal ceased to recognize interest income on the Watagan loan.