[miningmx.com] – COAL of Africa (CoAL) has launched a R1.29bn reverse takeover of Australia’s Universal Coal – a development CoAL CEO, David Brown, described as “… a springboard for creating a new coal mining force”.
The offer, comprised of A$0.20c/share in cash and one new CoAL share per Universal share, trumps the A$0.16c/share hostile takeover attempt of Universal’s 29.9% shareholder, IchorCoal, which was made on August 21.
CoAL’s offer equates to an aggregate value of about A$126.4m (R1.29bn) for the 505,685,447 Universal shares currently in issue and is a 16% premium to Universal’s share as of November 24, and a 35% premium to its close on October 30.
CoAL said it had received support from about 40% of Universal’s shareholders including its independent directors, holding 3.25% of the stock, who have also recommended the reverse takeover. The takeover requires 50% support of CoAL’s shareholders. Completion of the deal has been pencilled in for March, 2016.
IchorCoal, which is run by former ArcelorMittal SA CEO, Nonkululeko Nyembezi-Heita, is
listed in Germany. Nyembezi-Heita told Miningmx earlier this year that her company would consider its options if its takeover offer faced a rival offer.
“The combination of Universal’s producing assets and CoAL’s development portfolio, coupled with the excellent shareholder support ensures that the merger, as a first of its kind in the South African coal industry, will not be the last, we see the enlarged group as a springboard to creating a new coal mining force,” said Brown.
He added that buying Universal Coal would provide cash flow for CoAL which is essentially a development company having mothballed its Vele coal mine in South Africa’s Limpopo province whilst the operation is re-engineered. CoAL also has the Makhado project for which it is currently arranging finance.
For its part, Universal Coal has some 4.5 million tonnes/year (mtpa) of productive capacity from two mines in Mpumalanga province: the 2.4mtpa Kangala colliery and the 2mtpa New Clydesdale Colliery (NCC) bought from Exxaro Resources earlier this year.
Kangala supplies coal to Eskom whilst NCC, which is currrently ramping up output, is negotiating a coal sales agreement with the South African power utility. It also has a development project in Brakfontein in Mpumalanga province.
“This is a compelling offer that immediately crystallises value for our shareholders, yet allows shareholders to retain exposure to the new consolidated group. Looking ahead we see exciting times for the merged group,” said Tony Weber, CEO of Universal Coal.
