WESFARMERS is emerging as the frontrunner to buy the assets of the collapsed West Australian coal miner Griffin Coal after the State Government ruled out a rescue package, saying the miner was ''unlikely to survive''.
Griffin, owned by the reclusive millionaire Ric Stowe, was one of five companies in the Griffin Group placed in the hands of corporate paramedics over the weekend after it defaulted on $US475 million ($530 million) in payments to US bondholders.
After emergency meetings between administrators and state ministers in Perth yesterday, the Energy Minister, Peter Collier, said it was likely Griffin Coal would be put on the auction block.
A Wesfarmers-owned business, Premier Coal, the main competitor to Griffin in supplying coal to the state's power stations, appears the most logical buyer of the failed company.
Andrew Harrington, an analyst at Patersons Securities, said Wesfarmers was a likely bidder because there were few other players in the state's coal industry.
''The obvious candidate is Wesfarmers,'' Mr Harrington said. ''They are already a big owner of coal assets in Western Australia.''
A Wesfarmers spokesman, the former premier Alan Carpenter, noted Griffin's collapse, but said its future was a matter for the company's management and administrators.
''Wesfarmers is watching with interest but does not want to get involved with any speculation about the future of Griffin,'' he said.
One big hurdle to Wesfarmers snapping up its rival would be competition concerns because Premier Coal already supplies nearly half the coal in the South-West electricity grid.
Mr Collier said if Wesfarmers bought Griffin's coal assets it would become a near-monopoly supplier to the state's power stations, but he would not comment on how the Government would respond.
Unlike the heavily coal-dependent eastern states, most of the state's power supply came from gas-fired stations.
Mr Harrington said a coal exporter looking to ship to the growing Indian market could be an outside chance to buy the assets.
Besides its bond debt of $530 million, Griffin has an estimated $170 million of debt with three banks, primarily ANZ.
The bank loans include a partially drawn $320 million line of credit with ANZ, secured against the Bluewaters power station; a $30 million facility with the Commonwealth Bank, secured against oceanfront land at Bunker Bay, south of Perth; and a $2 million facility with St George, secured against properties near its coal mine at Collie, south of Perth.
It is understood the banks will not appoint receivers to protect their interests.
The Collie operations produce about 5 million tonnes of coal a year, and the company said its mineable reserves exceeded 200 million tonnes.
In recent years Griffin lost supply contracts it had with the State Government to its rival Premier Coal. From this year, Wesfarmers will take over the exclusive contracts to supply the state-owned generator Verve Energy, which it won in 2005.
The Griffin group has since built the first stage of the Bluewaters power station outside Collie, which draws on coal from its mines. It is expected to be completed in 2014.
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