Private debt funds sought for BHP mine bid

PRIVATE credit funds are in talks to lend US$750 million for an Australian company’s bid to buy one of BHP Group’s Queensland mines.

A term sheet in circulation shows that Stanmore Resources is seeking to borrow a total of US$1.1 billion for its acquisition of the Daunia coal mine, said people familiar with the matter. The coal producer is also in talks to secure a US$350 million bank loan, said the sources, who asked not to be named because the matter is confidential.  

Stanmore would fund the remainder of the purchase via equity, the sources also said. The company declined to comment when contacted by Bloomberg.  

BHP announced earlier this year that it planned to divest two of its coal mines in Queensland, Daunia and Blackwater, saying it would struggle to compete for capital as the company changes tack.

Indonesian mining contractor PT Bukit Makmur Mandiri Utama and Stanmore made initial bids for at least one of them, and private credit funds were considering jumbo loans to help with the financing, Bloomberg reported late last month. 

Private debt has become an increasingly sought-after funding tool globally, as banks pull back amid a drop in investor risk appetite. Stanmore already relied on this type of lending in 2021 to partially fund its acquisition of BHP’s 80 per cent stake in a coal operation joint venture with Mitsui & Co in Bowen Basin, Queensland. 

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For BHP’s Blackwater mine, Bukit Makmur Mandiri Utama is in talks with two banks for a loan of as much as US$750 million to back its bid, according to people familiar with the matter. 

The Indonesian mining contractor is in separate talks with private credit funds and global banks for an acquisition loan, which would be held at the level of a special purpose vehicle, they said.