[miningmx.com] – A BUSINESS rescue practitioner confirmed the South African subsidaries of Australian coal development firm, Continental Coal (ContiCoal), were in business rescue proceedings, but added that if a $75m bid for the firm proposed earlier this year passed muster, it would be “a great outcome’.
ContiCoal chairman, Peter Landau, announced in January that he had received an offer from a UK-headquartered private equity firm, Ivory Mint, for the coal firm and that proof of funds had been provided.
This was in addition to a A$4m rights offer for ContiCoal which would keep the firm afloat whilst Landau chased down an end-February deadline to save the company. The rights issue is well below the A$35m Landau said last year would be raised for the company.
The offer from Ivory Mint replaces an earlier bid for ContiCoal from the little-known Stellenbosh-based company, LSP Energy.
“The [Ivory Mint] offer, as it is purported, would do a lot of good. It would be a great outcome for everyone and it is a very collaborative approach,’ said Peter van den Steen, a business rescue practitioner at V-Squared Business Rescue Services.
Continental Coal SA, as well as Mashala Resources and the Penumbra mine, were in business rescue proceedings following a court order by Absa which had provided Continental Coal $65m in finance in 2011, although not all of this is thought to have been drawn down. The Australian firm owns 74% of Continental Coal SA.
“If, hypothetically, it takes a long time to do the transaction, or the process can’t be done, then I would look to start a process whereby I bring in possible investors for the assets,’ said Van Den Steen.
“In such an event, though, I would need shareholder approval so the one hand washes the other. If the shareholder were not to approve it, then the business rescue would fail,’ he said.
Continental Coal said on January 9 that it had received an offer for the 2.2 million tonnes/year subsidiary from Ivory Mint Corporation, a business owned by Irving Aronson, an entrepreneur in the energy sector.
Ivory Mint has attracted some negative press in the past, however, following a bid last year to save a UK-listed business, Strategic Natural Resources Ltd (SNRL), which owned the failed Elitheni coal mine in South Africa’s Eastern Cape province.
In an article in Share Prophets, it was observed that Ivory Mint, through a related company called Target Alliance, bought £1m ($1.5m) in SNRL shares and then appointed its own directors to the SNRL board. Target Alliance then sold the SNRL stock, but at around the same time took a £400,000 ($600,000) investment in Millenium Holdings, an energy company related to Mint Ivory.
It did this whilst without a nominated advisor or Nomad which means that the investment in Millenium Holdings did not have the correct approvals, a development that would appear to be behind the resignation of some of SNRL’s non-executive directors who were not Ivory Mint representatives, said the article in Share Prophets. Aronson could not be contacted at the office number listed on the company’s website.
Meanwhile, it is thought there’s at least one potential rival bid for ContiCoal from a South African source waiting in the wings.
“The business practitioner will make the final ruling,’ said a market source. “At the moment, the company is being made to look like a Porsche when it’s just a 1970s Beetle that has been done up,’ he said.
