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Why Yancoal Australia Ltd (ASX:YAL) just prepaid debt worth US$450 million

Credit: Oatsy

Australia’s largest pure-play coal producer, Yancoal Australia Ltd (ASX: YAL), has announced today that it has prepaid US$450 million in loans to the Bank of China and the China Construction Bank.

This payment is in addition to the US$150 million that was paid in December 2017 thereby making it a total of US$600 million that has been paid since the US$2.45 billion acquisition of Coal and Allied Industries from Rio Tinto Limited (ASX: RIO).

The prepayment is aimed at strengthening the company’s balance sheet and positions it for long term growth and new investment opportunities.

Yancoal’s debt to equity ratio has decreased from 366% in December 2016 to 94% in December 2017 and that looks set to continue decreasing.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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