A DUE diligence into Universal Coal ahead of a R2.15bn bid for the company by Johannesburg-listed Afrimat, an industrial minerals company, was continuing, Afrimat said in full-year results ended February.
Afrimat bid 40 Australian cents per Universal Cloal share effectively knocking out a previous bid tabled by Ata Resources, a private equity firm that led a consortium in which Wescoal Holdings was also a participant. The consortium had bid 35 cents/share.
Afrimat said today that its non-binding indicative offer to buy Universal Coal was “subject to various conditions precedent including the completion of a due diligence by the company, the finalisation of financing arrangements and board and shareholder approval in respect of the proposed transaction”.
Andries van Heerden, CEO of Afrimat, told Miningmx on April 8 that his company had been looking to diversify and considered coal an important mineral, especially given the “coal cliff” that the government-owned power utility, Eskom, was said to be facing.
“We hope to have access to the data room and that we can complete the due diligence in six weeks, but hopefully four,” said Van Heerden in April.
A rights offer to part finance its bid – equal in rands to R2.15bn – was likely, said Van Heerden. The balance of its offer would be debt financed. Afrimat, which has invested in the iron ore industry, has a market value of some R4.44bn.
Universal Coal is listed in Sydney, but it operates in Mpumalanga province. It currently produces just over five million tons/year (Mt/y) from two collieries: the 2.4Mt/y Kangala colliery and New Clydesdale Colliery (NCC) which is forecast to produce 2.7Mt/y in 2019.