Continental Coal has received several approaches from parties interested in acquiring all or part of its South African thermal coal assets. Some offers are several times Continental’s current market cap of AUD 16 million, indicating the assets are trading at a significant discount to market value.
Continental has received several approaches from parties interested in acquiring all or part of its South African thermal coal assets. Some offers are several times Continental’s current market cap. of AUD 16 million indicating the assets are trading at a significant discount to market value.
Continental Coal looks set to complete a deal comprising either a direct investment in or an outright acquisition of one or all of its South African thermal coal mining assets by the end of the year with several non-binding offers received. Significantly, if implemented the proceeds would be more than sufficient to meet the company's forecast working capital requirements for the next 12 to 24 months.
The company has received several approaches from India-based coal and power utility companies as well as major global commodity trading and private equity groups, interested in acquiring all or part of the company’s South African thermal coal mining business. These discussions are well advanced and indicate that the company’s assets are currently trading at a significant discount to market value.
Continental has now formalized a due diligence and bidding process with its advisors in South Africa and has received very encouraging indicative non-binding bids including offers several times Continental’s current market cap. of AUD 16 million.
Mr Don Turvey CEO of Continental Coal said that “While occurring concurrently with the other initiatives being progressed by the company, the Board is well advanced in these discussions and are encouraged by the strategic importance of its South African assets to the prospective bidders. The indicative non-binding offers received from these parties and the values that they have attributed to our South African thermal coal mining business suggests that our assets are currently trading at a significant discount to market value.”
These bids have been reviewed and a final short list of parties have been pre qualified by Continental to complete final due diligence. Final binding and committed offers are scheduled to be received by Continental at end of the September 2012 quarter and, subject to the offers received, the company anticipates completion of the transaction by the end of the year.
The investment in or acquisition of one or more of the company’s South African thermal coal mining assets is part of the company’s focus to strengthen its balance sheet and increase working capital. Importantly, proceeds from these initiatives, once successfully completed, should be more than sufficient to meet the company’s forecast working capital requirements for the next 12 to 24 months.
Annual corporate costs are forecast to reduce by 60% to USD 3.6 million in the 2013 financial year, from about $9 million, excluding SIOC-cdt transaction costs in the 2012 financial year. The initiatives have centered on the reduction of non-essential expenditure potentially utilizing cash balances in South Africa to fund corporate working capital and the finalization of its formal process regarding a significant direct investment and acquisition of one or more of its African thermal coal mining assets.
Source - Proactive Investors
(www.coalguru.com)
