Wrap Text
Recommended offer for Universal Coal Plc by Coal of Africa Limited
Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000CZA6
JSE/ASX/AIM share code: CZA
("CoAL or the "Company" or the "Group")
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR PART) IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF
THE RELEVANT LAWS OF SUCH JURISDICTION
26 November 2015
RECOMMENDED OFFER
for
UNIVERSAL COAL PLC
by
COAL OF AFRICA LIMITED
The board of directors of CoAL and the Independent Universal Directors are pleased to announce
that they have agreed the terms of a recommended Offer to be made by CoAL for the entire
issued and to be issued share capital of Universal. This Announcement follows the Indicative
Offer Announcement on 2 November 2015 and the further announcement made by Universal on
24 November 2015, respectively.
Transaction Highlights:
- The CoAL Board believes that the Offer is compelling for both CoAL and Universal
shareholders. 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.
- Under the terms of the Offer, Eligible Universal Shareholders will be entitled to receive, for
each Universal Share1 held:
- A$0.20 in cash and 1 New CoAL Share; or
- subject to eligibility under applicable securities laws, a non-converting, secured Loan
Note with a principal amount of A$0.25 per Loan Note.
1
Universal has a number of CDIs in issue, with each CDI conferring a beneficial interest in one Universal Share. No
separate offer is being made to acquire CDIs, however holders of CDIs may accept the Offer in respect of the Universal
Shares underlying their CDIs. References to "Universal Shares" and "Universal Shareholders" in this Announcement
include a reference to CDIs in respect of the Universal Shares underlying the CDIs and to the holders of those CDIs,
where the context requires.
014-3091-3236/5/EUROPE
- Restricted Universal Shareholders will not be entitled to participate in the Cash and Share
Offer2 but will instead be entitled to receive, for each Universal Share held:
- A$0.25 in cash; or
- subject to eligibility under applicable securities laws, a non-converting, secured Loan
Note with a principal amount of A$0.25 per Loan Note.
- Eligible Universal Shareholders may elect to receive a combination of the Cash and Share
Consideration (or, in the case of Restricted Universal Shareholders, the Cash Consideration)
and Loan Notes, subject to eligibility3.
- The Cash and Share Offer represents a total offer consideration comparable to A$0.25 per
Universal Share, based on A$0.20 in cash and 1 New CoAL Share valued at A$0.05 4, and
equates to an aggregate value of approximately A$126.4 million (US$91 million) for the
505,685,447 Universal Shares currently in issue.
- The Cash and Share Offer provides Eligible Universal Shareholders with the opportunity to
participate in the growth of the combined group.
- The CoAL Board believes the Offer represents a highly exciting and attractive value
proposition for CoAL Shareholders as the Offer is value accretive and should support a re-
rating as CoAL transitions from a project developer to having 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. The two companies have complementary
business, development and funding profiles and the Offer will create a more diverse group
with an enhanced financial and market profile, and be led by a management team with
proven operational capabilities. The Offer is the result of detailed technical and other due
diligence undertaken over a number of months which has given the CoAL Board confidence
in an exciting future.
- The Loan Notes will have a maximum 18 month term and carry interest at a rate of 12.68 per
cent. per annum for the first 12 months after the date of issue, and 15 per cent. per annum for
the remainder of the term. The Loan Notes will be redeemable by the holder on the first
anniversary of the date of issue and otherwise will be redeemed in full at the end of the 18
month term.
- The CoAL Board believes that the Offer should be highly attractive to Universal Shareholders,
providing them with a total Offer consideration which represents a premium of approximately:
- 35.14 per cent to the Universal Closing Price of A$0.185 per Universal Share on 30
October 2015 (being the last business day prior to the Indicative Offer Announcement);
2
For regulatory reasons, the Cash and Share Offer cannot be made to Restricted Universal Shareholders (which includes
Universal Shareholders in the United Kingdom and other jurisdictions in which the Cash and Share Offer is prohibited or
restricted by applicable law), having regard to the cost and time requirements to allow the Cash and Share Offer to be
made in Restricted Territories. However, certain Universal Shareholders in Restricted Territories may be included in the
Cash and Share Offer on the basis of exemptions to applicable securities laws. Full details will be set out in the Offer
Document.
3 For regulatory reasons, the Loan Notes will not be offered to Universal Shareholders who are Australian residents, other
than certain professional and sophisticated investors or other investors who do not require disclosure under Chapter 6D of
the Corporations Act and to whom Division 5A of Part 7.9 of the Corporations Act does not apply.
4
Based on the CoAL Closing Price on the JSE on 24 November 2015, and applying relevant exchange rates.
014-3091-3236/5/EUROPE
- 32.64 per cent over the 60 day VWAP of A$0.188 per Universal Share for the period
ended 24 November 2015 (being the last practicable trading day prior to this
Announcement);
- 16.28 per cent to the Universal Closing Price of A$0.215 per Universal Share on 24
November 2015 (being the last practicable business day prior to this Announcement);
and
- 56.25 per cent to the Ichor Offer price of A$0.16 per Universal Share.
- The VWAP of CoAL Shares on the JSE for the 60 and 30 day periods ending on 24
November 2015 was A$0.062 and A$0.057 respectively.
- 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 (comprising,
in aggregate, 3.25 per cent. of Universal's total issued share capital). This
recommendation does not affect the Independent Universal Directors ability to discharge
their duties as directors of Universal; and
- receive the Loan Note Alternative in respect of their entire holding of Universal Shares.
- CoAL has received signed statements of intent to accept the Offer from Universal
Shareholders (including the Independent Universal Directors) in respect of 202 768 708
Universal Shares, representing 40.1 per cent. of Universal's total issued share capital,
including Coal Development Holdings B.V., Universal's second largest shareholder with an
interest of approximately 28.4% of Universal's total issued share capital. Each of these
Universal Shareholders has also stated their intention to elect for the Loan Note Alternative in
respect of their entire holding of Universal Shares.
The Transaction Highlights should be read in conjunction with the full text of the full
Announcement, which is available for inspection on CoAL's website at www.coalofafrica.com.
Tony Weber, CEO of Universal commented:
"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."
David Brown, CEO of CoAL commented:
"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."
Further details:
- CoAL believes that retaining key personnel within Universal would be important for delivering
the business' future strategy. CoAL views Universal as an extremely well managed business
and intends to utilise the services of the current Universal executive management team.
- The cash consideration payable under the Offer will be funded by CoAL's existing cash
reserves and through the proceeds of a US$15 million equity investment from Yishun
014-3091-3236/5/EUROPE
Brightrise at a price of US$0.0435 (approximately A$0.061) per CoAL Share, pursuant to the
YBI Subscription Agreement. It is expected that CoAL will raise further equity capital totalling
US$3 million on equivalent terms from one other strategic partner.
- CoAL and Universal have entered into a Cooperation Agreement to govern their relationship
and conduct in relation to the Offer.
- Further details are set out at Appendix II of the full Announcement.
- In conjunction with the Offer, CoAL will make separate offers to the holders of certain "in the
money" options and warrants which, on exercise, will result in the issue of new Universal
Shares, to provide the holders of the relevant securities with the benefits of the Offer as if
they had been able to participate in the Offer. These offers will be made prior to the expiry
date of the relevant securities and will be subject to the same terms and Conditions as the
Offer.
- The Acquisition will constitute a "reverse takeover" (as defined in the AIM Rules) for CoAL.
Accordingly, CoAL will be required to seek approval for the Acquisition by the majority of
CoAL Shareholders at the CoAL General Meeting and, following such shareholder approval,
to apply for readmission of its shares to trading on AIM. The Offer is conditional upon the
CoAL Resolution(s) being passed at the CoAL General Meeting. A notice of meeting for the
CoAL General Meeting, which will also comprise an admission document prepared in
accordance with the AIM Rules, will be sent to CoAL Shareholders in due course. Other
CoAL shareholder approvals, for the purpose of the ASX Listing Rules, will also be required
in order to implement the Offer. These shareholder approvals will also be sought at the CoAL
General Meeting.
- The CoAL Board intends to unanimously recommend CoAL Shareholders to vote in favour of
the CoAL Resolution(s) at the CoAL General Meeting, as they intend to do in respect of their
own CoAL Shares.
- Prior to the formal Offer Document being sent to Universal Shareholders, CoAL will seek
written statements of intention to vote in favour of the CoAL Resolution(s) from CoAL
Shareholders representing at least 50 per cent. of CoAL's total issued share capital.
- In addition to CoAL Shareholder approval, the Offer will be conditional on, among other
things:
- CoAL receiving valid acceptances of the Offer in respect of not less than 50% of the total
voting rights carried by Universal Shares (including for this purpose, any voting rights
attaching to any Universal Shares which are unconditionally allotted or issued before the
Offer becomes or is declared unconditional as to acceptances, whether pursuant to the
exercise of conversion of subscription rights or otherwise);
- CoAL receiving valid elections for the Loan Note Alternative in respect of Universal
Shares representing not less than 40% of the total voting rights carried by Universal
Shares (including for this purpose, any voting rights attaching to any Universal Shares
which are unconditionally allotted or issued before the Offer becomes or is declared
unconditional as to acceptances, whether pursuant to the exercise of conversion of
subscription rights or otherwise);
- each of the Subscription Agreements having become unconditional in all respects, and
not having been terminated in accordance with its terms;;
- the Offer not becoming subject to the Code;
014-3091-3236/5/EUROPE
- the approval of the Acquisition by the South African competition authorities;
- all necessary Authorisations and certain contractual consents being obtained on terms
acceptable to CoAL, acting reasonably; and
- there having been no material adverse change in the financial or trading position of, or
prospects for, the Universal Group, taken as a whole, since 30 June 2015, and certain
events relating to Universal and its business not having occurred.
- A formal Offer Document (which shall also comprise or include a prospectus prepared in
accordance with the Corporations Act in respect of the offer of the New CoAL Shares)
containing the full details of the Offer, including how Universal Shareholders can accept, will
be sent to the Universal Shareholders as soon as possible after the date of this
Announcement. It is further expected that, the Offer will complete, subject to the satisfaction
of the Conditions, and settlement to accepting Universal Shareholders will be made, in early
March 2016.
- If, following completion of the Offer, CoAL has reached the appropriate threshold
shareholding in Universal, it intends to procure that an application be made to remove
Universal from the official list of ASX.
Information on Universal:
- Universal is incorporated in England and Wales and is listed on the ASX under the ticker
"UNV". Universal holds a 70.5% interest in and operates the Kangala Colliery, an operating
thermal coal mine, and recently completed the acquisition of a 49.0% interest in the New
Clydesdale Colliery ("NCC"). Both mines are located in the Witbank coalfield in Mpumalanga
province of South Africa. Universal also holds an interest in a number of other South African
coal projects which are at various stages of pre-feasibility and feasibility.
- Kangala is an operating thermal coal mine located approximately 65km east of Johannesburg.
First coal sales from Kangala occurred in April 2014, with steady state production
subsequently achieved in October 2014. The entire project consists of three properties;
Wolvenfontein (location of the Kangala Mine), Middelbult and Modderfontein located near
several coal-fired power stations. The mine's JORC compliant coal resources are 143.4 Mt, of
which 90.4Mt are Measured (including 19.6Mt proven Reserves), 19.4Mt Indicated and
33.6Mt Inferred. At planned production levels of 2.4 Mtpa, the mine has an eight year forecast
life before the Wolvenfontein reserves are exhausted. The product is primarily sold in the
domestic South African market to power utility Eskom under a long term coal sales
agreement ("CSA").
- Universal completed the acquisition of NCC from Exxaro on 24 August 2015. A JORC
compliant resource of 147.1Mt Measured and Indicated (including 40.8Mt proven and
probable Reserves) and 16.9Mt Inferred exists. The mine will initially be developed as an
open pit operation targeting production of 2Mtpa (Phase 1). First coal is expected in H1 2016,
subject to the finalisation of a CSA with Eskom. This CSA is nearing settlement, with
agreement in principle already reached on key commercial terms.
- Universal also has a strong organic development pipeline including:
- a potential underground expansion at NCC, increasing NCC production from
2Mtpa to 2.8Mtpa (Phase 2);
- a potential 1.2Mtpa thermal coal mine at Brakfontein, with an option to utilise
Kangala's excess processing capacity;
014-3091-3236/5/EUROPE
- a potential to develop a production node point around Arnot South (post
completion of the acquisition of Arnot South), similar to those developed around
Kangala and NCC; and
- a long term opportunity to develop a sustainable 10Mtpa semi-soft coking coal
and thermal coal operation at Berenice Cygnus.
Further information about Universal can be found at www.universalcoal.com
This summary should be read in conjunction with the full text of the full Announcement (including
the appendices). The Offer will be made on the terms and subject to the Conditions and further
terms set out in Appendix I to the full Announcement and the further terms and conditions set out
in the Offer Document. Reference to all Appendix documents refer to the Appendix as contained
in the full Announcement.
A summary of the terms of the Cooperation Agreement is set out in Appendix II. A summary of
the terms to the Loan Notes is set out at Appendix III. Capitalised terms used in this
Announcement have the meaning given to them in the full Announcement. Appendix V contains a
reserve and resource statement and related compliance information for Universal.
Enquiries
CoAL Telephone: +27 (0)10 003 8000
David Brown, De Wet Schutte and Celeste Riekert
Qinisele Resources (Proprietary) Limited (Financial Adviser Telephone: +27 (0)11 883 6358
to CoAL)
Robert Philpot and Dennis Tucker
Peel Hunt LLP (Nominated Adviser and Broker to CoAL) Telephone: + 44 (0)20 7418 8900
Matthew Armitt, Richard Crichton and Ross Allister
Investec Bank Limited (JSE Sponsor for CoAL) Telephone: +27 (0)11 286 7000
Robert Smith and Tanya Cesare
Tavistock (United Kingdom PR Adviser to CoAL) Telephone: +44 20 7920 3150
Jos Simson and Emily Fenton
014-3091-3236/5/EUROPE
Universal Telephone: +27 12 460 0805
Tony Weber and Daryl Edwards
GMP Securities Europe LLP (Financial Adviser to Universal) Telephone: +44 20 7647 2800
Richard Greenfield and Mitch Limb
FCR (PR Adviser to Universal) Telephone: +61 2 8264 1003
Robert Williams
Further information
This Announcement is for information purposes only and is not intended to, and does not
constitute, or form part of, an offer to sell or any invitation to purchase or subscribe for any
securities or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of any securities or the solicitation of any vote or approval in any jurisdiction
pursuant to the Offer or otherwise. This Announcement does not constitute a prospectus or a
prospectus equivalent document. Universal Shareholders are advised to read carefully the formal
documentation in relation to the Offer once it has been dispatched. The proposals for the Offer
will be made solely through the Offer Document, which will contain the full terms and conditions of
the Offer. Please carefully read the Offer Document in its entirety before making a decision with
respect to the Offer. Any acceptance or other response to the proposals should be made on the
basis of the information in the Offer Document.
The release, publication or distribution of this Announcement in jurisdictions other than the United
Kingdom, Australia and South Africa may be restricted by law or regulation and therefore persons
into whose possession this Announcement comes should inform themselves about and observe
such restrictions. Any failure to comply with these restrictions may constitute a violation of
securities laws of any such jurisdictions. To the fullest extent permitted by law, CoAL and
Universal disclaim any responsibility or liability for the violation of such restrictions by such
persons.
Any person (including, without limitation, any custodian, nominee or trustee) who would, or
otherwise intends to, or who may have a contractual or legal obligation to forward this
Announcement and/or the Offer Document and/or any other related document to any jurisdiction
outside the UK should inform themselves of, and observe, any applicable legal or regulatory
requirements of their jurisdiction before taking any action.
The Offer is subject to the laws of the United Kingdom and is not subject to the Code or the
jurisdiction of the Panel and this Announcement has not been prepared for the purpose of
complying with the Code.
Qinisele Resources (Pty) Limited is acting as financial adviser to CoAL in connection with the
Offer and for no one else and will not be responsible to anyone other than CoAL for providing the
protections afforded to its clients or for providing advice in relation to the Offer, the contents of
this Announcement or any matters referred to herein.
Peel Hunt LLP, which is authorised and regulated in the UK by the Financial Conduct Authority, is
acting as nominated adviser and broker to CoAL in connection with the Offer and for no one else
014-3091-3236/5/EUROPE
and will not be responsible to anyone other than CoAL for providing the protections afforded to its
clients or for providing advice in relation to the Offer, the contents of this Announcement or any
matters referred to herein.
GMP Securities Europe LLP, which is authorised and regulated in the UK by the Financial
Conduct Authority, is acting as financial adviser for Universal in connection with the Offer and for
no one else and will not be responsible to anyone other than Universal for providing the
protections afforded to its clients or for providing advice in relation to the Offer, the contents of
this Announcement or any matters referred to herein.
Overseas Shareholders
The Offer is not being made, directly or indirectly, in, into or from an Excluded Jurisdiction where
to do so would violate the laws in that jurisdiction, and the Offer is not capable of acceptance from
or within an Excluded Jurisdiction (in each case, unless otherwise determined by CoAL).
Accordingly, this Announcement is not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in, into or from an Excluded Jurisdiction where to do so
would violate the laws in that jurisdiction.
The availability of the Offer (including the Loan Note Alternative and/or the Cash and Share
Consideration or Cash Consideration (as applicable)) to Universal Shareholders may be affected
by the laws of the relevant jurisdictions in which they are resident. Universal Shareholders should
inform themselves of, and observe, any applicable requirements in deciding whether to accept
the Offer.
Without limiting the foregoing, Australian domiciled Universal Shareholders may only receive the
Cash and Share Consideration under the Offer and will not be entitled to elect the Loan Note
Alternative, subject to the exception of 'professional' or 'sophisticated' investors or other persons
who do not require disclosure under Chapter 6D of the Corporations Act and to whom Division 5A
of Part 7.9 of the Corporations Act does not apply, who may elect to receive the Loan Notes.
Forward-Looking Statements
This Announcement, including information included or incorporated by reference in this
Announcement, may contain "forward-looking statements" concerning CoAL and/or Universal that
are subject to risks and uncertainties. Generally, the words "will", "may", "should", "continue",
"believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking
statements. These forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those expressed in the forward-looking statements. Many of
these risks and uncertainties relate to factors that are beyond CoAL and Universal's ability to
control or estimate precisely, such as future market conditions, changes in regulatory
environment and the behaviour of other market participants. CoAL and Universal cannot give any
assurance that such forward-looking statements will prove to have been correct. The reader is
cautioned not to place undue reliance on these forward looking statements. CoAL and Universal
assume no obligation and do not undertake any obligation to update or revise publicly any of the
forward-looking statements set out herein, whether as a result of new information, future events
or otherwise, except to the extent legally required.
Statements of intention
Statements of intention are statements of current intentions only, which may change as new
information becomes available or circumstances change.
014-3091-3236/5/EUROPE
Exchange rates
In this Announcement the following exchange rates have been applied:
- US$ / A$ of 0.72
- ZAR / A$ of 0.0991
Publication on websites
A copy of the full Announcement is and will be available free of charge, subject to certain
restrictions relating to persons resident in Excluded Jurisdictions, for inspection on CoAL's
website at www.coalofafrica.com and on Universal's website at www.universalcoal.com by no
later than 12 noon (London time) on 26 November 2015.
Investec Bank Limited is the nominated JSE Sponsor
About CoAL:
CoAL is an AIM/ASX/JSE listed coal exploration, development and mining company operating in
South Africa. CoAL’s key projects include the Vele Colliery (coking and thermal coal), the Greater
Soutpansberg Project /MbeuYashu, including CoAL’s Makhado Project (coking and thermal coal).
AU: Coal of Africa Limited, Suite 8, 7 The Esplanade, Mount Pleasant, Perth WA 6153, Australia,
Tel: +61 8 9316 9100, Fax: +61 8 9316 5475
ZA: South Block, Summercon Office Park, Cnr Rockery Lane and Sunset Avenue, Lonehill, 2191,
Tel: +27 10 003 8000 Fax: +27 11 388 8333 Email: adminza@coalofafrica.com
Bernard R. Pryor – Chairman, David H. Brown – Chief Executive Officer,
Non-executive directors: Peter G. Cordin, Andrew D Mifflin, Khomotso B. Mosehla ,Thabo F
Mosololi, Rudolph H. Torlage
014-3091-3236/5/EUROPE
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