Joy Global Doesn’t Plan Share Sale to Fund International Mining Takeover

Joy Global Inc. (JOYG), the maker of P&H and Joy mining equipment, said it doesn?€™t plan to sell shares to finance its purchase of China?€™s International Mining Machinery Holdings Ltd. (1683)

?€œRight now, we are not planning to issue any equity,?€ Chief Executive Officer Michael Sutherlin said in an interview at Joy?€™s offices in Milwaukee today. ?€œIf we reach a point where the balance sheet is levered more than we are comfortable, than we would look at equity.?€

The amount of cash versus debt to be used hasn?€™t been determined, he said. Joy is weighing the use of cash held offshore and issuing debt outside the U.S., Sutherlin said.

Joy said yesterday it agreed to pay about HK$4.55 billion ($583 million) for private-equity firm Jordan Co.?€™s 41 percent stake in International Mining. Joy will be required under the Hong Kong Takeovers Code to bid for the rest of the shares should the deal get Chinese antitrust approval. Government authorization may take two to six months, Sutherlin said.

?€œWe are going to use excess cash and then take the rest out of debt,?€ Sutherlin said. ?€œWe are not going to take cash down to zero. We are going to have a comfortable cash balance.?€

The timing of regulatory approval and the number of shares tendered are among the variables that will affect decisions about financing the deal, he said.

The current per-share offer is ?€œattractive?€ and Joy doesn?€™t plan to get into a situation where it has to negotiate for the rest of the stock, Sutherlin said. Joy is willing to be patient if it isn?€™t able to acquire all of International Mining?€™s shares in a single tender, he said.

Joy, which is based in Milwaukee, is paying HK8.50 a share for its initial stake in the Chinese company. International Mining, which makes coal-mining equipment, rose HK$1.14, or 17 percent, to HK$7.69 in Hong Kong trading today, giving it a market capitalization of HK$10 billion. At that valuation, it would be Joy?€™s biggest acquisition, topping the $1.1 billion purchase of LeTourneau Technologies Inc. from Rowan Cos. in June, data compiled by Bloomberg show.

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