Shandong Energy provides a $775 million USD loan to Yancoal Australia to refinance Watagan bonds

Project narrative

On March 31, 2021, Shandong Energy Group Co., Ltd. (SDE) (formerly Yankuang Group Corporation) provided a $775 million USD loan to Yancoal Australia Limited — an Australia-incorporated coal mining company majority owned by Chinese state-owned enterprise Yankuang Energy Group Company Limited (whose ultimate parent is Shandong Energy) — to refinance $775 million USD of bonds issued by Yancoal Australia's wholly owned subsidiary Watagan Mining Company Pty Ltd. This loan carried a maturity date of December 16, 2026, a maturity period of about 5.666 years, and an interest rate of 4.65% (an implicit discount between the agreed interest rate and determined arms length commercial interest rate of the loan of 12%), and was provided on an unsecured and subordinated basis. Previously, 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. The transaction was completed on March 31, 2016, and Yancoal Australia lost accounting control (but not ownership) of Watagan that same day when Watagan issued $775 million USD of secured debt bonds to three bondholders. Then, on December 16, 2020, Shandong Eenrgy and bondholders Yankuang Group (Hong Kong) Ltd ($200 million USD), Industrial Bank Co. Ltd ($550 million USD), and United NSW Energy ($25 million USD) entered into a commercial arrangement that gave Yancoal Australia accounting control over Watagan again. All bonds were refinanced on March 31, 2021. As of December 31, 2012, $789 million AUD ($563 million USD) (net of discounted equity contribution) was the outstanding balance. This loan was fully repaid in 2022.