Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – South Africa-focused thermal coal producer Continental Coal on Wednesday announced that it had successfully arranged a fully underwritten nonrenounceable pro rata rights issue to raise about A$35.1-million to recapitalise the company’s balance sheet.
The offer, for which the prospectus would be lodged with the ASX on or about August 15, would be made to shareholders on a nine for one basis at the issue price of A$0.005.
Continental noted that the offer would be fully underwritten and had received strong support from institutional and sophisticated investors in Australia, Europe and South Africa, as well as a number of commodity trading groups and specialist coal mining investment funds.
“The company believes the level of demand reflects the underlying value of the company’s thermal coal mining operations and development assets in South Africa,” it stated.
The net proceeds of the rights issue would be used to repay Continental’s unsecured convertible noteholders, repay short-term loans and royalty holders, repay bridging finance secured in 2014, reduce the group’s other borrowings, provide funds towards the development of the company’s advanced coal mining projects – including De Wittekrans – and provide additional working capital.
Meanwhile, in conjunction with the rights issue, the company had also reached agreement with key unsecured convertible noteholders, royalty holders and bridge financiers to repay outstanding amounts on a reduced basis.
It had further negotiated a restructure of its EDF Trading coal supply agreement.
The net effect of this would be the substantial recapitalisation and restructure of the company’s balance sheet, which would substantially reduce the group’s total indebtedness.
Continental pointed out that it was also in advanced discussions with EDF and Absa Bank in respect of restructuring debt funding facilities for the coal supply agreement and the Penumbra coal mine, in Mpumalanga, which, if completed, would further improve the company’s balance sheet and financial position.
“As a result of this recapitalisation, the company anticipates that its securities will resume trading on both the ASX and Aim markets by the end of September following completion of the underwritten rights issue,” the coal miner said.