Mon, 28 Oct 06:15:00 GMT
MELBOURNE, Oct 28 (Reuters) - China's Yanzhou Coal Mining Co <600188.SS> is under pressure to raise its $191 million offer to take its Australian Yancoal unit private from Singapore's Noble Group , a key Yancoal shareholder, people familiar with the process said.
Yanzhou <1171.HK> proposed in July to buy out the 22 percent of Yancoal Australia Ltd that it does not already own at A$0.91 a share, but it has yet to make a formal offer.
Hong Kong-based commodities trader Noble, which owns more than half the minority shares and could block the deal from going ahead, has put a proposal to Yanzhou for a higher offer, two people familiar with the process said.
"Noble understands what Yanzhou's objectives are and is empathetic, but they want proper value for their stock," one of the people said.
Yancoal's independent directors said on Monday they were not involved in any discussions between Noble and Yanzhou and were unaware of the outcome of any talks.
Yanzhou, China's third biggest coal firm by market value, was not immediately available for comment. Noble declined to comment.
The deal would give Yanzhou more control over a key coal asset at a time when its market value has slumped in line with falling coal prices. But it is expected face stiff opposition from local regulators as it appears to run counter to previous requirements that Yancoal be run as an Australian company.
The government would have to waive key conditions imposed on Yanzhou when it took over Felix Resources in 2009 for A$3.5 billion and when Yancoal merged with Gloucester Coal last year. [ID:nL4N0FE43F]
Sources declined to comment on the status of Yanzhou's talks with the Foreign Investment Review Board (FIRB), which must make a recommendation to Australia's new treasurer, Joe Hockey.
FIRB conditions required Yanzhou to list its Australian assets, which it did last year through the Gloucester merger, to reduce its 78 percent stake in Yancoal Australia to less than 70 percent and to cut its economic stake in the underlying Felix assets to no more than 50 percent by the end of 2013.
Yancoal's shares rose 1.4 percent on Monday to A$0.72, trading well below the value of the offer as uncertainty weighs on whether a deal will go ahead.
($1 = 1.0431 Australian dollars)
(Reporting by Sonali Paul; Editing by Richard Pullin)