Gloucester issued a statement on Tuesday, announcing due diligence had been completed along with adjustments to the possible transaction.
The company informed the market on December 23 of the proposed merger, which would position Gloucester as Australia’s largest independent coal mining company.
A revised proposal includes modified contingent value right shares for Gloucester shareholders and a $300 million reduction in Yancoal’s current debt contribution.
Gloucester said the deduction in Yancoal’s debt contribution was due to a reduction in the Australian dollar value of Yancoal’s US dollar denominated debt as well as a result of operating cash flow since November 2011.
Under the revised terms of the proposal, Gloucester shareholders would be given $3.15 in cash, down from $3.20.
The $3.20 cash per Gloucester share is made up of a special dividend of approximately 44c per Gloucester share, down from the original 56c a share.
Meanwhile Gloucester’s shareholders’ ownership in the merged group has been reduced by 1%, receiving 22% instead of 23%.
The merger remains subject to Foreign Investment Review Board approval, Yanzhou shareholder approval and various other Australian and Chinese regulatory approvals.
Gloucester chairman James MacKenzie said combining the Gloucester and the Yancoal assets would have significant benefits.
“This transaction provides Gloucester shareholders with the opportunity to participate in a globally significant coal company that is expected to be Australia’s largest listed pure-play producer,” he said.
“The Gloucester board unanimously believes shareholders should support the proposal as it provides an opportunity to participate in the benefits of creating a world class coal producer, and separately, the opportunity to receive cash payments of $3.15 per share in the form of a special dividend and capital return.”
Yancoal chairman Wang Xin said the proposed merger “generates synergies through increased coal blending and marketing opportunities and savings in procurement, logistics and overhead.”
Gloucester’s largest shareholder, the Noble Group, said it would vote in favour of the merger in the absence of a superior proposal.
The Noble Group has a 64.5% stake in Gloucester.
Shareholder meetings are due to take place in mid-May, followed by a scheme of arrangement which would be implemented in mid-June.
Gloucester recently reported an interim net profit drop of $36.9 million for the six months to December.
