Forbes Coal’s Theron booted in $19m ouster

[miningmx.com] – ONE of the announcements to pass under the radar last
year was the restructuring of Forbes Coal & Manhattan Corporation (Forbes Coal) which sees a change in ownership and current management ousted.

Forbes Coal operates two anthracite mines in South Africa’s KwaZulu-Natal. Anthracite is used as a cheaper alternative to coking coal in the steel-making process.

Posted on December 31, just after midday in Johannesburg, Forbes Coal said its CEO and president, Stephan Theron, and the firm’s chairman, Stan Bharti, would step down from the board once it had finalised a $19m loan facility. Malcolm Campbell, who was Forbes Coal’s chief operating officer in South Africa, takes up the CEO position.

The facility, offered by shareholder Resource Capital Fund (RCF), provides a $4m bridge loan and a $15m convertible loan the repayment of which will be in Forbes Coal shares at C$0.14 per common share. Forbes Coal is currently capitalised on the Toronto Stock Exchange at C$4m and on the JSE at R122m.

Bharti will be replaced by Craig Wiggill, a non-executive director of Forbes Coal who will become executive chairman on an interim basis. Directors Deborah Battiston and Neil Said will also step down from the board with Sarah Williams becoming CFO. The changes are dependent on the closure of the loans.

The ouster seems to have its roots in shareholder displeasure during October in which Forbes Coal’s governance standards were questioned – a situation Theron dismissed as the words of “a smear campaign” by “dissident shareholders”.

However, Theron acknowledged shareholder criticism by re-jigging the board with Wiggill and another South African coal mining executive, John Dreyer (Shell and JCI), taking up positions.

However, Forbes Coal’s problems continued to mount. It became embroiled in a R45m legal tussle with Riversdale Mining, a company owned by Rio Tinto, following the aborted R440m acquisition of Zululand Anthracite Colliery (ZAC). In addition, Forbes Coal’s relationship with the National Union of Mineworkers deteriorated.

The appointment of Campbell as CEO, who is based in South Africa, would suggest that RCF would prefer a hands-on approach and a quicker decision-making process based on direct technical knowledge.

Forbes Coal said that on completion of the loan transactions, the company would embark on a more thorough-going recapitalisation, as well as a rebranding exercise in an effort to distance the company from the Forbes Group which operates in a manner similar to Hunter Dickinson, offering fee-based central services.

“The company is in discussions with its senior lender regarding a restructuring of its debt facilities, and will be implementing a rebranding strategy, including a change of name,” it said in the December 31 announcement.