[miningmx.com] — WHEN Julian Treger starts identifying potential takeover targets, I suppose it’s only sensible to sit up and take notice.
For those who can remember, Treger is an interesting, if somewhat obscure, character. It was he who collaborated with fellow South African, Brian Myerson, in Value Active Funds, a shareholder activist group that fought for the control of Primedia’s strategy in 2001.
The affair ended a year later with Primedia founder and chairman, Issy Kirsch and fellow directors taking leave of the board. But not before a torrent of accusations and counter-allegations, including claims from Primedia sympathisers that Value Active Funds had dealt illegally with certain share trades that enabled it to secure a foothold in Primedia’s affairs.
It ended all hue and cry; nothing was proved. As it happened, Treger took up a position on Primedia’s board with business partner Mark Barnes. Today, Treger is the founder of Audley Capital Advisors, a company that after start-up in 2005 struck it big time in the coal industry.
That was after Treger took a position in the near bankrupt UK coal producer, Western Coal, for an initial investment of £25m. By the time Treger cashed out, amid a takeover by US firm, Walter Energy, the investment had grown to £520m.
He’s now identified JSE-listed Coal of Africa (CoAL) as a potential takeover target.
At the time of the Madrid Coaltrans World Coal Conference earlier this month, Treger said water permitting issues were some of the obstacles in CoAL’s way that, if they could be removed, would open the company to corporate stalkers. Days later, CoAL managed to secure water permitting for its Vele coking coal project situated in the Limpopo Province’s poorly named Waterberg region.
Treger isn’t the only one talking up CoAL’s take-out status. It was the subject of takeover talk earlier this year with both ArcelorMittal and Xstrata linked with a bid for the firm – speculation that CEO, John Wallington, describes as “weird”.
The fact of the matter, however, is that Treger’s right: CoAL is well positioned to take advantage of burgeoning prospects for coking coal producers.
Also speaking at the Madrid conference, former commodities trader Stephen Doyle estimated that the coking coal price would touch $265/t over the next 12 months.
Compare this to the coal South Africa traditionally exports: thermal coal, currently selling for about $110/t. In addition to producing a premium product – a first for South Africa, which is not known as a coking coal producer – CoAL also has an advantage over rivals in that it has exclusive rights to the use of Grindrod’s expansion of Mozambique’s Matola terminal from the current 6Mtpa capacity to 20Mtpa.
So it has a potential outlet where rival Waterberg players have none.
As for Treger, he’s – shall we describe him – not the media type. Asked why he was backing CoAL so strongly as a takeover target, he murmured something about a previous engagement and took flight, adding, as he flew, that he had “a few percent in CoAL”.
– The article first appeared in Finweek. If you want to subscribe to the digital format of Finweek visit www.zinio.com.
