Cockatoo Coal says a South Korean conglomerate is able to increase its stake in the miner beyond 20 per cent without triggering a full takeover because the transaction is not being conducted on-market and requires shareholder approval.
SK Networks, the trading arm of SK Group, plans to increase its stake in Cockatoo Coal from 5.5 per cent to 40 per cent in the first half of this year via a $313 million share placement.
Under Australian takeovers law, usually any bid for more than 20 per cent of a listed corporate entity triggers a full takeover.
The placement would not trigger the need for a full bid because it was being conducted off-market and needed shareholders to back it, a Cockatoo Coal spokesman told AAP.
Under the placement agreement, the Korean conglomerate is not allowed to raise its stake in Cockatoo Coal above 40 per cent for four years, "except in limited circumstances", the miner said in a statement on Monday.
The spokesman said the Korean company would need the consent of all non-SK Networks board members to use the "creep" provisions of Australia's Corporations Act, which allows stakes to be increased above 20 per cent with the purchase of up to three per cent of a company every six months.
Cockatoo Coal said SK Networks would have the right to nominate two additional directors to the miner's board, giving SK Networks three representatives on a 13-person board.
"It (the placement agreement) is specifically set up so that they don't creep up to get control without having to go through an overt change-of-control offer," the spokesman said.
The miner aimed to address any shareholder concerns about the transaction before an extraordinary general meeting to vote on the deal, which would be held by mid-June, he said.
The placement is subject to approval by Australia's Foreign Investment Review Board, and will involve a placement of about 585 million shares at 53.5 cents a share, a 47 per cent premium to Cockatoo Coal's closing price on Friday.
Cockatoo Coal shares jumped 4.5 cents, or 12.33 per cent, to 41 cents on Monday.
Korean companies have stepped up their efforts to secure a stable supply of raw materials and energy by acquiring foreign firms.
Cockatoo Coal holds 1.5 billion tonnes of thermal coal resources across its Surat Basin and Kingaroy projects in Queensland, and also operates the Baralaba open cut metallurgical coal mine in Queensland's Bowen Basin.
Cockatoo Coal expects the Baralaba mine will produce about 750,000 tonnes in the next 12 months and plans to expand output to 3.5 million tonnes per annum by 2014.
SK Networks has agreed to provide a guarantee to support a $150 million secured loan facility for Cockatoo Coal, which is not dependent on the placement proceeding.