How Coronado’s $265M Deal with Stanwell Could Secure Queensland’s Energy Future
Coronado Global Resources has proposed a significant financial support transaction with Stanwell Corporation, aiming to enhance liquidity, extend coal supply agreements, and support Queensland’s energy needs and local employment.
- Proposed $265 million, 5-year financing facility from Stanwell
- Extension of coal supply agreement to 2043 with increased flexibility
- Replacement of existing loan with more covenant flexibility
- Support for over 2,500 jobs in Central Queensland
- Conditional prepayments linked to Coronado’s cash balance thresholds
Financial Lifeline Amid Market Challenges
Coronado Global Resources Inc. has announced a proposed financial support transaction with Queensland’s Stanwell Corporation that could reshape its financial landscape. The deal, currently non-binding and subject to due diligence and approvals, aims to provide Coronado with much-needed liquidity and flexibility in a volatile commodity market.
The centerpiece of the arrangement is a new US$265 million, five-year loan facility from Stanwell, replacing Coronado’s existing asset-based loan held by an Oaktree Capital affiliate. This new facility offers a competitive interest rate between 9% and 12%, alongside significant covenant flexibility, which should ease financial pressures on Coronado and provide breathing room for its operations.
Extended Coal Supply and Job Security
Beyond financing, the transaction extends the existing New Coal Supply Agreement (NCSA) from 2037 to 2043, with Stanwell gaining a wider nomination range of 1.2 to 2.24 million tonnes annually. This extension not only secures a stable coal supply for over 10% of Queensland’s energy needs but also underpins employment certainty for approximately 2,500 workers and their families in Central Queensland.
Stanwell’s commitment includes waiving rebate payments under the amended coal supply agreement starting in 2026, and providing prepayments for future coal deliveries when Coronado’s cash reserves dip below US$250 million. These prepayments will carry a capped fixed interest rate, ensuring Coronado can manage its cash flow more predictably.
Balancing Liquidity and Deleveraging
The agreement also sets clear liquidity thresholds – Coronado must maintain a minimum cash balance of US$300 million after dividend payments and senior note repurchases, which will drive appropriate deleveraging of its balance sheet. When cash balances exceed this threshold, Coronado will deliver prepaid coal tonnes at no cost, reducing its prepayment obligations to Stanwell.
This structured approach reflects an effort to balance immediate liquidity needs with long-term financial health, a critical consideration for a cyclical commodity business facing ongoing market uncertainties.
Looking Ahead
While the transaction remains subject to final approvals and documentation, it signals a strategic partnership that could stabilize Coronado’s finances and reinforce its role in Queensland’s energy sector. Investors will be watching closely as the company navigates the next steps toward completion and execution.
Bottom Line?
Coronado’s proposed deal with Stanwell could mark a turning point in its financial stability and regional energy supply commitments.
Questions in the middle?
- Will the transaction receive all necessary approvals and finalize on schedule?
- How will the new financing terms impact Coronado’s profitability and credit metrics?
- What are the long-term implications for Queensland’s coal market and energy security?
