WESFARMERS is emerging as the front-runner to buy the assets of collapsed West Australian coalminer Griffin Coal, after the WA Government ruled out a rescue package by saying the miner was ''unlikely to survive''.
Griffin, owned by multimillionaire Ric Stowe, was one of five companies in the group placed in the hands of administrators over the weekend after it defaulted on $US475 million ($530 million) in payments to US bondholders.
After emergency meetings between Griffin administrators and state ministers in Perth yesterday, WA Energy Minister Peter Collier said it was likely Griffin Coal would be put on the auction block. Wesfarmers-owned Premier Coal, the main competitor to Griffin in supplying the state's power stations, appears the most logical buyer.
Andrew Harrington, a coal analyst at Patersons Securities, said Wesfarmers was the most likely bidder to snap up Griffin's coal assets, as there were few other players in the state's coal industry. ''The obvious candidate is Wesfarmers. They are already a big owner of coal assets in Western Australia,'' he said.
Wesfarmers spokesman and former WA premier Alan Carpenter said: ''Wesfarmers is watching with interest but does not want to get involved with any speculation about the future of Griffin.''
One big hurdle to Wesfarmers snapping up its rival would be competition concerns, as Premier Coal already supplies nearly half the coal in the south-west electricity grid.
Mr Collier said that if Wesfarmers bought Griffin's coal assets it would become a near-monopoly supplier of coal to the state's power stations, but he would not comment on how the Government would respond. Unlike the heavily coal-dependent eastern states, most of WA's power supply comes from gas power stations.
Mr Harrington said a coal exporter looking to ship to the growing Indian market could be an outside chance to buy the assets, but WA's coal industry was nearly all domestic.
Besides its bond debt of $530 million, Griffin has an estimated $170 million of debt to three banks, most of it to ANZ.
The bank loans include a partially drawn $320 million line of credit with ANZ, secured against the Bluewaters Power station; a $30 million facility with Commonwealth Bank, secured against land at Bunker Bay, south of Perth; and a $2 million facility with St George Bank, secured against properties near its coalmine in Collie, south of Perth.
It is believed the banks will not appoint receivers to protect their interests.
Griffin's Collie operations produce about 5 million tonnes of coal a year. The company says its total coal reserves exceed 200 million tonnes.
In recent years Griffin lost coal supply contracts it had with the WA Government to Premier Coal. From this year, Wesfarmers will take over the exclusive contracts to supply state-owned generator Verve Energy.
The Griffin Group has built the first stage of the Bluewaters coal-fired power station outside Collie. It is expected to be completed in 2014.
