Resourcehouse Ltd., the Australian coal and iron-ore company seeking to raise as much as $3.6 billion in a Hong Kong share sale, may cut the price of the offering, two people with knowledge of the matter said.
The company may sell shares below a price range of HK$4.48 to HK$4.93 marketed to investors after failing to get orders for all the stock, the people said, declining to be identified as the process is private. Andrew Crook, an outside spokesman for Resourcehouse owner Clive Palmer, wasn’t immediately available to comment.
Palmer, a 57-year-old law school dropout who made his fortune in real estate, is seeking to take advantage of near- record commodity prices driven by demand from China. The Brisbane, Australia-based company won’t turn a profit until 2014 or 2015 when output at its coal and iron ore projects is forecast to begin.
Resourcehouse wants to develop an iron ore mine in Western Australia that will cost at least A$2.7 billion and an $8.6 billion coal mine in Australia’s Queensland state. About $2.4 billion of the money raised will be used to develop the coal project and $700 million will be allocated to the iron ore project.
The company planned to sell at least 5.7 billion shares. Palmer will retain a 53.67 percent stake in the company if an over allotment option to sell 857 million more isn’t exercised. The shares are expected to start trading June 10.
China Railway Group Ltd. (390) and Metallurgical Corp. of China Ltd. have both agreed to invest about $200 million in Resourcehouse. The company said the IPO may be followed by a A$1.9 billion debt sale to a Chinese company.
BOC International Holdings Ltd., HSBC Holdings Plc, Royal Bank of Scotland Group Plc and UBS AG are managing the sale.