In its takeover offer, CoAL has offered A$126.4 million to acquire the entire issued and to be issued share capital of Universal – a significant premium of 56.25% to that currently being offered by Ichor in its unsolicited offer.
This follows the offer by major shareholder IchorCoal in September to acquire the company at A$0.16 a share, valuing Universal Coal’s entire issued ordinary share capital at approximately A$80.9 million – an offer viewed by Universal Coal as “inadequate” and “opportunistic”.
“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, we see the enlarged group as a springboard to creating a new coal mining force,” says CoAL CEO David Brown.
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. Successful completion of the offer will create a balanced and focused South African coal miner.
CoAL is offering A$0.20 in cash and one CoAL share, or, subject to eligibility under applicable securities laws, a nonconverting, secured loan note worth A$0.25 for each share held in Universal.
Eligible Universal shareholders may also elect to receive a combination of the cash and share consideration.
Meanwhile, restricted Universal shareholders will not be entitled to participate in the cash and share offer and will only be eligible to receive A0.25 in cash for their Universal share.
The cash and share offer provides eligible Universal shareholders with the opportunity to participate in the growth of the combined group with cash generative assets which generate positive cash flows from the sale of thermal coal into the domestic South African market under long term coal sale agreements, which will complement CoAL’s flagship Makhado project and development project pipeline.
“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,” says Universal Coal CEO Tony Weber.
Each of the independent Universal directors intends to recommend that the Universal shareholders accept the offer, as the independent Universal directors intend to do in respect of all their own Universal shares.
The acquisition will constitute a “reverse takeover” as defined in the AIM Rules, and CoAL will therefore be required to seek approval for the acquisition by the majority of CoAL shareholders at the CoAL general meeting.
CoAL has already received signed statements of intent to accept the offer from Universal shareholders in respect of 202 768 708 Universal shares, representing 40.1%.