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Queensland coal port to sell off with a value of $1.2 billion

Business

The float of the Dalrymple Bay coal port has finally been revealed with plans to raise $656 million through the issue of stapled securities priced with a yield of 7 per cent.

Print article

The issue price will be $2.57 a security and comprise an ordinary share and an unsecured note that will be traded together.

Owners Brookfield will hold 49 per cent of the company that will be known as Dalrymple Bay Infrastructure Limited (DBI). The Queensland Government will invest $128 million in the port and hold a 9.9 per cent stake through the Queensland Investment Corporation.

It will have a market capitalisation of approximately $1.286 billion on listing. The stability of DBI’s strong operating cash flow is expected to support a first half distribution in 2021 of $45 million. The company will carry debt of $1.7 billion.

The float would be the largest infrastructure listings in 10 years and will list on the ASX on December 8. Former Goss Government Treasurer David Hamill will be the company’s chairman.

A prospectus was lodged today.

There is an expectation that DBI will undertake a major expansion of the port from its current 85 million tonnes to about 100 million tonnes.

That would effectively open up export avenues for another six planned central Queensland coal mines.

The expansion of the port would generate about 500 jobs.

The company will own 100 per cent of the long-term leasehold in Dalrymple Bay Terminal, near Mackay, one of the world’s largest metallurgical coal export facilities.

Hamill said the terminal was a highly strategic asset given its critical role in the global steelmaking supply chain.

“As the key export gateway for some of the highest quality product available to the global steel industry, it is a significant contributor to the Queensland economy, the world’s largest export region for metallurgical coal, handling more than 30 per cent of the state’s coal exports.

“As the terminal begins to accommodate expected future growth from the Bowen Basin, so too will it support further regional investment and jobs, particularly around the broader Mackay region.”

Chief executive Anthony Timbrell said DBI maintained longstanding relationships with its key customers, which include blue chip global mining companies exporting to more than 25 countries.

“Its long-term contracts and stable regulatory environment support consistent and predictable cash flows.

“The terminal’s capacity is fully contracted to high quality customers from mid 2022 until 2028 on a 100% take-or-pay basis. We have been pleased with the resilience of the business over a long period, including through the recent COVID-19-related restrictions.

“The outlook for exports remains strong, underpinned by stable, consistent demand from traditional markets and emerging growth centres in India and South East Asia.”

BIP Bermuda Holdings IV Limited (which is managed by Brookfield) may hold up to 49 per cent of the stapled securities of the issue at the completion of the offer and has entered into a voluntary escrow agreement in relation to these stapled securities.

Under the escrow agreement, BIP may dispose of one-third of the securities it holds following completion of the IPO after DBI releases its first half 2021 results, a further one-third of the its full-year 2021 financial results and the balance when DBI releases its half year ending 30 June 2022 financial results.

Morgans Stockbroking will be a co-lead manager of the offer and Wilsons and Crestone will be co-managers.

 

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