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Gloucester Coal To Buy Two Mining Companies; Plans Equity Raising Of A$230 Mln

Australian coal miner Gloucester Coal Ltd. (GCL.AX) said Sunday evening it has agreed to buy mining companies Donaldson Coal Holdings as well as Monash Group. The company also announced an equity raising of about A$230 million or $242.78 million to partly fund the acquisitions and to repay debt.

Gloucester has entered into an agreement with its largest shareholder, Hong Kong-based commodities company Noble Group Ltd. (NOBGF.PK), to acquire Noble's entire stake in Donaldson Coal Holdings Ltd.

Gloucester will acquire Donaldson from Noble for an enterprise value of A$585 million or $617.50 million, comprising A$360 million in new Gloucester shares issued to Noble at A$9.75 per share and A$225 million in debt.

Donaldson owns one open cut and two underground mines producing thermal coal and semi-soft coking coal products, located about 25 kilometres west of Newcastle, New South Wales. It also has an 11.6 percent founding shareholding in NCIG Holdings Pty Limited, a new coal export terminal at the Port of Newcastle.

Following the deal, Noble's shareholding in Gloucester will decline to about 63.4 percent from the current 65.3 percent. Gloucester also said it has entered into new marketing arrangements with Noble, which will take effect on completion of the proposed acquisition of Donaldson.

In addition, Gloucester has entered into a deal with shareholders of Ellemby Holdings Pty Ltd. to acquire Monash, a prospective large semi-soft coking and thermal coal development opportunity located near existing infrastructure in the Hunter Valley.

The company will acquire Monash for a base purchase price of A$30 million in cash and nominal number of new converting shares for the provision of additional shares to the Ellemby shareholders on the achievement of key milestones.

Gloucester noted that the proposed acquisition of Monash is interconditional with the proposed acquisition of Donaldson and is subject to various conditions, including approval by Gloucester shareholders. The company said it has asked its shareholders to vote on the transaction at its general meeting that is expected to be held on or about July 8, 2011.

Additionally, Gloucester will conduct equity raising of about A$230 million at A$9.00 per share through a fully underwritten 2 for 11 non-renounceable accelerated pro-rate entitlement offer. The company will raise A$210 million from institutional shareholders and $20 million from retail shareholders.

However, the offer price of A$9 per share represents a 9 per cent discount to the last trading price of $9.90. The shares are currently in a trading halt.

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