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‘What went wrong here?’: Big banks refuse coal king $1b debt refinance

Australia’s big banks have turned their backs on the country’s largest pure-play coal miner, refusing to refinance a billion-dollar debt in a major rebuff that will force Whitehaven Coal to source loans offshore, sending a worrying signal to other large coal producers and potentially speeding up the demise of the sector.

Published: SMH, Simon Johanson, 17 July 2023. 

Whitehaven revealed its funding problems in a quarterly update on Monday, saying it has managed to source credit for mine rehabilitation, clean-up costs, port, rail and other activities, but could not to get a $1 billion finance facility renewed.

The debt revelation will put pressure on Whitehaven’s ability to expand its coal mines, and surprised financial analysts who asked the company: “What went wrong here?”

The banks’ decision not to back the company’s thermal mines – where the most polluting form of coal is dug up to generate electricity in power stations – means Whitehaven will need to retain large amounts of cash on its balance sheet to operate the business while it looks for other loan sources.

“In your last production call, you stated discussions are ongoing and you were considering refinancing the company’s $1 billion credit facility. This morning we found out this isn’t happening. What went wrong here?” asked Stephen Henderson, an analyst at Shaw and Partners, in a conference call with executives on Monday.

The insurance about-turn follows pressure from Money Rebellion and the UK-based Coal Action Network over Probitas’ support for Adani’s mine.

Coal Insurer walks away from Adani’s Carmichael coal mine “We didn’t renew our funding,” Whitehaven’s managing director and chief executive officer, Paul Flynn, confirmed. “Look, it’s hard yakka. That’s not news to anybody on the thermal [coal] side of things.”

“There’s no doubt that some of the banks have chosen not to participate in the refinancing as we go forward. Thermal coal has been less appealing from the bank’s perspective in terms of how they want to decarbonise their lending portfolios,” Flynn said.

A NAB spokesperson said it did not comment on individual customers, but the bank had a policy of reducing its exposure to thermal coal.

Read the full story here. 

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