Cape Town - Coal of Africa (CoAL) and Universal Coal announced on Thursday they had agreed the terms of a reverse takeover of CoAL in a deal worth A$126.4 million ($91 million).
In a statement the CoAL board said it believed the offer represented “a highly exciting and attractive value proposition for CoAL shareholders” and should support a re-rating.
This is “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”.
Universal Coal's chief executive Tony Weber said the “compelling” offer, which is in a combination of cash and shares, “immediately crystallises value for our shareholders, yet allows shareholders to retain exposure to the new consolidated group”.
CoAL's chief executive David Brown added: “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.”
The deal, which is subject to regulatory and shareholder approval, is expected to complete in March.
AFRICAN NEWS AGENCY