Whitehaven’s mystery investor fires warning shot

afr.com:

The $US3.5 billion-plus auction for BHP’s Blackwater and Daunia mines is creating a corporate stoush in an unexpected place: Whitehaven Coal.

The company is among the short-listed parties for the mines – with initial bids at between $US3.5 billion ($5.4 billion) and $US5 billion – alongside Yancoal Australia, Coronado Global Resources and BUMA Australia.

As Street Talk reported earlier this month, one major investor is plainly unhappy that Whitehaven – which has had a boom year and is sitting on more than $2.6 billion in cash – is considering acquiring the two Queensland coking coal mines being offloaded via BHP’s advisors Macquarie Capital.

The Daunia coal mine in Queensland. 

Binding bids went in late last week. Whitehaven is understood to be working with Itotchu, a Japanese trading house, on the bid.

That disgruntled investor is happy to work behind the scenes. Their identity remains unknown, although Whitehaven in its communication with shareholders had suggested that they are based in the United Kingdom.

Now Street Talk understands a letter has been dispatched to the Whitehaven board demanding answers to six questions, including whether the company intends to put the purchase of the mines to a shareholder vote.

The letter notes that Whitehaven, at the time of their first-half financial results earlier this year, had said it intended to use “surplus capital to buy back additional shares if returns are more attractive than growth investments”.

“The concerns raised by analysts are particularly heightened given recent news of [Whitehaven’s] inability to refinance its $1 billion debt facility… and the general lack of clarity around [the company’s] growth and expansion plans,” reads part of the letter seen by Street Talk.