Wescoal consortium to extend stake in company to 85% in offer to buy 116m shares

THE controlling shareholder in Wescoal Holdings, the eight million tons a year thermal coal miner, is to extend its stake to about 85% of the company.

RBFT Investments, a member of the consortium along with Simeka Capital Holdings, intends to buy 116 million shares in Wescoal for R1.20/share, equal to R134.4m. Simeka is chaired by Robinson Ramaite, the former chairman of Wescoal.

The offer for shares would remain open for 10 days from February 16.

“The parties remain extremely confident in the prospects of Wescoal, as illustrated by their consistent acquisition of a significant amount of Wescoal shares over the years,” said RBFT Investments in a statement on Tuesday.

Wescoal has been through a difficult two-year stretch in which operations have been disputed by social unrest as well as a force majeure imposed by Eskom, its main customer, amid the Covid-19 hard lockdown in March/April last year.

Reginald Demana, Wescoal CEO, said in December that he would press ahead with expansion plans despite the group’s cash-strapped position which forced it to restructure its debt and implement group-wide retrenchments.

Wescoal reported interim gross profits of R251.9m (six months to end-September 2019: R195.4m) and got back into the black with a net profit of R10.8m (-R50.5m).

Net debt dipped to R1.1bn (R1.2bn) while cash and cash equivalents rose to R205.4m  (R132.6m). However, this was due to the late receipt of funds “… from a major customer” relating to the previous financial year but only paid at the beginning of the current interim period.