PERTH (miningweekly.com) – ASX-listed Australian Pacific Coal is in talks with its largest shareholder Trepang Services over the future of the company and its Dartbrook coal asset, in New South Wales.

The two parties had previously agreed to an offer that would result in Australian Pacific Coal’s consolidated liabilities reducing by A$65-million, and the company receiving royalties from the net profits of the Dartbrook project of between A$2.50/t and A$5/t, based on the average coal price per quarter.

However, the transaction, which had been subject to shareholder approval, had been derailed by a non-binding alternative proposal from Nakevo, which was proposing to provide Australian Pacific Coal with immediate funding by way of an equity subscription for 19.97% shares in the company, at a price of 30c each for a total investment of A$3.78-million.

Nakevo would also arrange to refinance Australian Pacific Coal’s debt owed to creditors John Robinson, Nicholas Paspaley and Trepang Services, and would make a takeover bid for Australian Pacific Coal of up to 30c a share, allowing existing shareholders to liquidate their investment once the refinancing has been completed.

The company subsequently also received another non-binding indicative proposal from M Resources, offering immediate funding to Australian Pacific by way of a subscription for 14.99% of the company’s shares, for a total investment of A$2.7-million.

The M Resources offer also included Australian Pacific and its lenders agreeing to refinance or restructure the company’s current debt, and an all-cash consideration of 36c a share for Australian Pacific, valuing the takeover offer at A$18.2-million.

Earlier this month, the Trepang transaction was terminated, as Australian Pacific shareholder approval for the deal was not obtained before the required date. Simultaneously, Australian Pacific immediately launched a 5.83-for-1 fully underwritten renounceable pro-rata entitlement offer, priced at 34c a share, to raise A$100-million.

The proceeds from this entitlement offer will be used to fully repay the Trepang debt and to fund general working capital.

In conjunction with the entitlement offer, Australian Pacific also entered into a non-binding agreement with M Resources to joint venture (JV) on the Dartbrook mine, and for potential future mine management services at the operation.  

Australian Pacific on Thursday said that the company and Trepang have been investigating a transaction structure which would see Trepang being provided an economic interest in Dartbrook by M Resources in consideration for Trepang extending the land access agreements and water rights to allow underground mining operations at Dartbrook to continue.

At this stage no agreement has been reached but the company, Trepang and M Resources have agreed to continue discussions to see if a transaction can be structured, with the parties reserving all rights.

Australian Pacific this week also received a new non-binding indicative proposal from Pacific Premium Coal (PPC), which, like Nakevo, is linked to coal boss Nathan Tinkler and is offering to acquire Australian Pacific for A$1 a share.

The proposal contained a number of pre-conditions, including that Australian Pacific enter into an agreement with the Trepang parties to convert the Trepang debt into a direct 40% interest in Dartbrook on terms acceptable to PPC, or should such an agreement not be forthcoming from Trepang, then PPC would repay all outstanding debts to the Trepang parties.

Given the non-binding proposal needs the support of Trepang to proceed, either by Trepang agreeing to convert the Trepang debt or by Trepang agreeing to the debt being repaid by PPC, Australian Pacific has requested urgent advice from Trepang as to whether it is willing to support non-binding indicative proposal, and satisfy the pre-condition.

Trepang has advised Australian Pacific that it is seeking advice on the proposal.

Australian Pacific told shareholders on Thursday that the PPC proposal is at an extremely early stage, is non-binding, conditional and requires further consideration, and shareholders were advised to take no action at this time.