Cockatoo Falls After SK Networks Drops Stake Plan: Sydney Mover
Cockatoo Coal Ltd. (COK) fell the most in seven months in Sydney trading after South Korea’s SK Network Co. scrapped a A$313 million ($324 million) plan to boost its stake in the Australian producer to 40 percent.
Cockatoo fell 7.3 percent to 32 cents, the most since Sept. 26, at the close in Sydney. The benchmark S&P/ASX 200 Index declined 0.3 percent.
Uncertainty in global markets and investment priorities had driven SK Networks’ decision, Cockatoo said today in a statement, citing the Seoul-based company. Under last month’s accord, the funds were to have been used to help fund the expansion of projects, including the Baralaba coal mine.
“The investment by SK Networks was important to fund Baralaba capital expenditure for the expansion,” James Stewart, a Sydney-based resources analyst for CLSA Asia-Pacific Markets, said by phone. “There needs to be another funding solution.”
The decision doesn’t affect a A$150 million loan to Cockatoo from KEB Australia Ltd., a unit of Korea Exchange Bank (004940), to fund commitments for its projects, Cockatoo said in the statement. Under the initial agreement, SK Networks, which owns a 5.5 percent stake in Cockatoo, agreed to guarantee the loan.
The undrawn A$80 million portion of the loan will help Cockatoo fund potential commitments and development work, the company said.
Rio Tinto Group, the third-biggest mining company, last week said it has pulled out of talks for a coal port expansion in Australia, citing economic volatility and higher costs. Coking coal prices have declined 7.8 percent this year, according to Platts, as China’s economy expanded at the slowest rate in five quarters in the first three months this year.
SK Networks dropped the planned investment following an internal review, the Korean trader of products including steel, oil and timber said today in a regulatory statement in Seoul.
To contact the reporter on this story: Elisabeth Behrmann in Sydney at email@example.com
To contact the editor responsible for this story: Rebecca Keenan at firstname.lastname@example.org