Mitsubishi UFJ Financial Group bought off its $85 million loan to Glencore’s Wiggins Island Coal Export Terminal in Australia to a hedge fund on Wednesday at some 52 cents on the greenback, two sources mentioned.
The expensive decision at a time of extreme market volatility extinguishes MUFG’s exposure to the coal-associated asset ahead of the bank’s financial year-end on March 31, the two sources said.
A spokesperson for Mitsubishi UFJ refused to comment. The three sources declined to comment publicly because they weren’t allowed to speak to the media.
WICET, the world’s most expensive coal terminal, is owned by Glencore and four partners, along with New Hope, China’s Yancoal, Coronado Global Resources, and Baosteel arm Aquila Resources.
The coal terminal is funded completely by debt backed by port fees. It owes $2.6 billion in senior debt due September 2026, A$383 million ($227.96 million) in junior debt and an A$575 million shareholder loan completing in 2020 and 2046, respectively.
The lending syndicate of the Queensland-based terminal includes around 23 lenders along with Australia’s four largest banks, Asian and European banks, and a few hedge funds.
Asset values worldwide have dropped to record lows in current days as the coronavirus pandemic that has infected thousands of people inflicts social constraints unseen since World War Two and sends economies tipping into recession.