JOHANNESBURG (miningweekly.com) – IchorCoal on Friday said it would not extend a cash offer for the shares it did not already own in ASX-listed Universal Coal beyond the February 5 deadline.
In September, IchorCoal, already the single largest shareholder with a 29.99% stake, offered A$0.16 a share for the remaining Universal shares.
“Shareholders have had enough time to consider the detail of IchorCoal’s offer and there is a reduced possibility of the deal being accepted due to the current Universal share price relative to IchorCoal’s offer price,” the company explained in a statement.
Delays in finalising a coal sales agreement with State-owned power utility Eskom for the New Clydesdale colliery (NCC) and the reduced value proposition on the back of an 18.8% depreciation of the rand against the Australian dollar since September 30 had also swayed IchorCoal’s decision.
The competing bid by Coal of Africa Limited (CoAL) had also played a role.
In November, CoAL formally launched a A$126.4-million takeover bid for Universal, a proposed tie-up that had already been given the green light by the South African Competition Commission.
However, IchorCoal questioned CoAL’s ability to service Universal’s debt burden and NCC obligations given the South African coal miner’s own project development obligations and forecast near-term cash flow.
“Pro forma financials provided in the CoAL offer document imply gross debt of over $100-million before interest, with significant near-term repayments, compared with only $59-million in available cash . . . further detail on CoAL’s ability to service this debt burden would be useful to shareholders,” IchorCoal commented.
The company did not expect Universal to pay material dividends in the near term.
“Universal had negative net operating cash flows of A$2-million in the half-year ended December 31, 2015, has never declared a dividend and has not announced an intention to declare a dividend in the near term,” IchorCoal pointed out.