Continental Coal Limited said it has accepted an offer from a South African consortium to sell its 74% interest on its subsidiary, Continental Coal Limited SA (CCL SA). The deal is subject to the buyer agreeing to terms and conditions including paying total purchase consideration of R700m (AUD$72.063m), proof of funds on or before 7 November 2014 and final due diligence sign off on or before 30 November 2014.
The buyer also has to make a deposit of Rand 50m posted upon final due diligence sign off (30 November 2014) which gets released to Continental upon relevant section 11 approval being obtained in South Africa and the Purchase Price includes assignment from CCC of its loan account with CCLSA of approximately AUD$100m.
The Purchaser is a consortium headed by LSP Energy (Pty) Ltd, a South African based fund representing significant capital pools with a focus on oil and energy investments.
“The Board is firmly of the view that the offer (if completed) would leave the company debt free with excess cash reserves at its disposal and the ability to pursue new opportunities that are continually being presented to it,” said Peter Landau, Executive Director of Continental Coal.
The company said with the accepted offer in place the Company will now be preparing and releasing a supplementary prospectus for its Rights Issue given the material nature of the change in circumstance.
The shareholders will be given the opportunity to have their funds returned from the Rights Issue, remain by way of the proposed supplementary prospectus or Shareholders who didn’t participate will be given an opportunity to participate. Timing for the closing of the supplementary prospectus will be on or about 1 December 2014 after payment of the deposit and due diligence sign off by the Purchaser.
Continental said the targeted completion date of 15 January 2015 unless otherwise agreed.