CoAL’s desperate move pays off
Universal Coal deal finalised
COAL of Africa (CoAL) shares on the JSE yesterday shot up on news its R1.3 billion bid for Universal Coal was fully funded.
CoAL rose 15.22percent before closing at 53c, which valued the company at R1bn.
The company, which is situated near the Mapungubwe National Park and Heritage site in Limpopo, last month offered to acquire Universal Coal in a desperate move to own cash after selling its assets due to the fall in coal prices.
The firm said yesterday that international asset manager, M&G Investment Management, had agreed to a $3million (R43m) subscription deal and that the acquisition was funded through cash and proceeds of a $15m investment from Yishun Brightrise.
”The $3m to be provided under the M&G subscription agreement is the final element of the financing required by CoAL for its offer to acquire all the issued share capital of Universal Coal.
“This means that, on the basis of the intention statements received by CoAL in respect of the loan note alternative for the offer, and subject to all applicable conditions being satisfied, the funding for the offer has now been fully secured,” the company said.
Yishun Brightrise, a private investment company looking at expanding into Africa, has already bought interests in coal and nickel in both China and Indonesia, snapped up a 9.5percent stake in CoAL in September.
This after shareholders approved a share placement to Yishun Brightrise Investment raising $14.5m to be used to finance pre-construction costs at the flagship Makhado thermal coal project. CoAL chief executive, David Brown, previously said that the company was pinning its hopes on Universal Coal to plug the cash generation and production gap.
Universal Coal has a portfolio of producing and exploration assets, including the Kangala mine in Witbank, which produces an average of 2 million tons of thermal coal a year primarily for the domestic market, and the New Clydesdale Colliery, which was under development and whose production is likely to be 1.5 million tons next year.
“The acquisition of Universal will provide CoAL with immediate coal production and cash flow as well as a diversified portfolio of production, development and exploration projects with expected synergies to the existing CoAL business,” Brown said in a statement.
The offer was backed by the Universal board. It came three months after German listed IchorCoal announced its plan to take over Universal Coal.
Environmental Affairs Minister Edna Molewa last month dismissed an appeal against the environmental authorisation amendments granted for Coal of Africa’s Vele colliery in the Limpopo province.
CoAL was granted amended environmental authorisation in January 2015 in terms of the National Environmental Management Act.
The environmental authorisation (EA) amendment was granted in January and appeals were lodged in April.
In evaluating the grounds of appeal, the Minister considered the fact that the EA amendment would not pose any additional impacts to those considered in the original Environ- mental Authorisation issued in terms of the law.