CoAL launches A$126.4m competing bid for Universal Coal

PERTH (miningweekly.com) – South Africa-focused coal miner Universal Coal on Thursday revealed that Coal of Africa (CoAL) is the suitor offering a competing bid to that of IchorCoal.

CoAL has formally launched its takeover offer, which values Universal at about A$126.4-million.

CoAL CEO David Brown said on Thursday that the tie-up of Universal and CoAL would be a springboard to creating a “new coal mining force”.

The acquisition of Universal would 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.

“The combination of Universal’s producing assets and CoAL’s development portfolio, coupled with the excellent shareholder support ensures that the merger, as a first of its kind in the South African coal industry, will not be the last,” commented Brown.

CoAL is offering 20c in cash and one of its own shares, or subject to eligibility under applicable securities laws, a nonconverting secured loan note worth 25c each for each share held in Universal. Eligible shareholders could also elect to receive a combination of cash and share consideration and loan notes.

Restricted Universal shareholders would not be entitled to participate in the cash and share offer, but would instead be entitled to receive 25c a share in cash for their holding in Universal, or a non-converting secured loan note to the same value.

In a joint statement, Universal said that the cash and share offer provided shareholders with the opportunity to participate in the growth of the combined group with cash generative assets, including CoAL’s flagship Makhado project, in South Africa’s Limpopo.

“This is a compelling offer that immediately crystallises value for our shareholders, yet allows shareholders to retain exposure to the new consolidated group. Looking ahead, we see exciting times for the merged group,” Universal CEO Tony Weber said.

As the acquisition would constitute a reverse takeover as defined by the Aim rules, CoAL would require shareholder approval for the transaction.

In addition, the transaction would also be subject to a number of other conditions, including a minimum 50% acceptance condition and South African regulatory approval.

CoAL had already received signed statements of intent to accept the offer from a number of Universal shareholders, which jointly own about 40.1% of the company.

Meanwhile, Universal shareholder IchorCoal had extended its own takeover offer for Universal Coal from December 3 to December 23.

Universal had consistently rejected a takeover offer from IchorCoal, which was offering shareholders A$0.16 a share in cash.