Hedge funds sniffing around WICET

<span class="" id="parent-fieldname-description"> The Australian Financial Review’s Street Talk column has suggested that hedge funds and investment banks are running the numbers on the Wiggins Island Coal Export Terminal (WICET) and whether its owners and lenders will be able to meet their commitments. </span> <p>After a lengthy gestation, WICET will open in early 2015 with an initial capacity of 27mtpa.</p><p>Eight miners are behind the first stage of the project. These comprise Aquila Resources, Bandanna Energy, Caledon Coal, Cockatoo Coal, Northern Energy Corporation, Wesfarmers Curragh, Yancoal, Glencore.</p><p>WICET says that “the industry-owned and privately funded delivery model is a first for Queensland and will be owned directly by its industry users rather than third party investors.”</p><p>However, the AFR notes that with coal prices well down on levels prevailing in 2010 when ANZ put together a 25-bank $4bn financing package, “the big question ahead of its scheduled completion is whether the port’s shipper shareholders will be able to meet their contracted capacity and their take or pay contracts.”</p><p>WICET foresees no problems. However, the AFR says that hedge funds have been analysing the port in light of current coal prices and “are watching the situation closely, testing whether it could be the next distressed situation.” Investment bank Goldman Sachs is also testing the value that lenders put on their stakes.</p><p>The AFR says that its sources have indicated that three preference shareholders – Bandanna, Aquila and Cockatoo – have already sold out. It added: “Then there are the 25-odd banks who have stumped up some $3bn and infrastructure funds like IFM who are in the $500m subordinated debt.”</p><p>WICET is located at Golding Point, to the west of the existing RG Tanna and Barney Point Terminals, and will form part of the existing Port of Gladstone.<br />Stage one construction of WICET is more than 85% complete, with the project scheduled to load its first ship in November 2014.</p><p><em><strong>This article was originally published in Rail Express’ sister publication, the Australian Bulk Handling Review.</strong></em></p>