Consortium led by Gear seeks private credit for mine deal: sources

A CONSORTIUM led by Golden Energy and Resources (Gear) is sounding out private credit funds and banks to gauge interest in financing its US$1.65 billion acquisition of a coal mine in Australia, according to people familiar with the matter.

The acquiring entity, Gear M Illawarra Met Coal, has mandated Grant Samuel as an adviser in its fundraising talks for the deal to acquire Illawarra Metallurgical Coal from Australia-based South32. 

Gear, controlled by Indonesia’s Widjaja family, owns a 70 per cent stake in Gear M Illawarra Met Coal, while M Resources holds the remaining 30 per cent.

If the deal proceeds with private funding, it will be the latest example of direct lenders stepping in to fill the spots left vacant by banks that are more tightly scrutinising environmentally questionable projects. 

Gear M Illawarra Met Coal has yet to formally circulate an official request for proposal to lenders, the people said. 

The proposed deal includes an upfront cash payment of US$1.05 billion at the time of its completion, deferred cash payment of US$250 million payable in 2030, and a contingent price-linked cash component of up to US$350 million, according to a filing by South32 last month when the sale was announced. 

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The sale is expected to close in the first half of 2025, subject to regulatory approvals, it said.

Gear did not immediately reply to a request for comment. M Resources and Grant Samuel declined to comment.

Gear is no stranger to the private credit market. Stanmore Resources, an Australian metallurgical company that Gear controls, last year sought a US$1.1 billion loan, including a US$750 million private credit portion, to back its bid for BHP Group’s Daunia coal mine.

Whitehaven Coal eventually emerged as the winner for Daunia and another mine. To finance the deal, Whitehaven received a US$1.1 billion loan from a group of lenders – including 17 private credit providers but only one bank. BLOOMBERG