South African coal miner Universal Coal has been approached with another unsolicited takeover offer on Monday.
The latest offer – a written confidential, nonbinding, indicative and conditional proposal – received by the company’s independent directors is offering to acquire all of the ordinary shares of Universal Coal at a price of A$0.25 per share, and certain convertible securities of the company.
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 proposed cash consideration of A$0.25 per share represents a significant premium of 56.25% to that currently being offered by Ichor in its unsolicited offer.
The independent directors consider the prospective buyer to be credible.
Under the offer, certain eligible shareholders would be able to elect to receive consideration in the alternative form of a non-converting, secured loan note.
The loan notes that would be offered to eligible shareholders under the offer as alternative consideration to the cash offer and would initially carry interest at a rate of 12.68% per annum and would be able to be redeemed after 12 months.
After that, the loan notes would be able to be retained at the option of the loan note holder for an additional 6 months and carry interest at a rate of 15% per annum for this additional period.
For regulatory reasons, it is unlikely any loan notes would be offered to Australian resident shareholders, other than certain professional and sophisticated investors who satisfy relevant criteria set out in the Australian Corporations Act.
The offer provides the making of a formal offer to shareholders, which will be subject to the satisfaction of conditions which include the unanimous recommendation of the directors of the company, the formalisation of the financing arrangements by the prospective buyer, and the completion of a short and focused due diligence exercise, which is ongoing.
Subject to the satisfaction of these pre-conditions, the independent directors intend to support the offer and, together with their advisers, are working with the potential buyer to assist in the facilitation of the making of a formal offer by late November.
Universal said that because there can be no certainty that a formal offer will be made by the potential buyer, it advised its shareholders to take no action in respect of the offer at the current time.
Meanwhile, Universal advises that it has written to the party from which it received a separate confidential, non-binding, indicative proposal from in September in connection with a cash offer at A$0.20 per share informing them that they are unlikely to be able to recommend a formal offer should it be made on the terms proposed at that time.
The efforts of the independent directors will now instead be focused on the A$0.25 per share offer.