Continental Coal Ltd
13 February 2014
Continental closes A$5m bridge funding with larger restructure / funding
solution well advanced
South African coal production company Continental Coal Limited (ASX: CCC; AIM:
COOL) ("the Company") is pleased to announce it has closed the previously
announced A$5 million of limited recourse bridge funding, with the larger
recapitalisation plans well advanced.
The funds have been received by the Company's escrow agent and all conditions
met, allowing for the funds to be released so as to meet key payments to
current creditors and ensure a 3 month standstill period to recapitalize the
Company and restructure its financial arrangements.
Importantly the Company will focus on, and ensure, stability at an operational
level with the Company's current mining operations whilst saving significant
costs at the corporate level. As part of the restructure process, Continental
will look to strengthen its BEE credentials in South Africa and generate
additional synergies with key strategic partners including Eskom, Transnet and
RBCT to ensure a significant growth profile moving forward.
The new Board of Continental includes Mr Peter Landau and Dr Paul D'Sylva, who
have had considerable capital markets and junior resource sector experience,
together with Dr Lars Schernikau who is a coal marketing specialist with many
years of coal experience operating in South Africa, Asia and Europe. See below
for further details on the board appointments.
Commenting on the closing of the bridge financing and the associated board
changes, interim Chairman Dr Paul D'Sylva said, "While it has experienced some
balance sheet issues the Company is well positioned to supply the domestic/
global coal markets from two operating mines.
"We have received interest from a number of globally recognised energy
investors/traders to participate in the Company going forward, which we expect
to finalise shortly.
"We have complete faith in the assets and operational management of the
Company, but believe a range of strategic and financing opportunities can be
advanced so as to stabilise the Company's balance sheet and focus on
significant growth following completion of the proposed rights issue," Dr
D'Sylva added.
Board and Management Changes
The following individuals have now been appointed to the Board as new directors
of the Company:
* Mr Peter Landau, who is a former executive director of the Company, having
resigned in May 2013. Mr Landau is the founding director of Okap Ventures
Pty Ltd, an internationally focused project management, corporate advisory
and capital raising firm based in Western Australia and London. Mr Landau
is a Director of various ASX and AIM listed resource companies including
Range Resources Limited, Nkwe Platinum Limited and Black Mountain Resources
Limited;
* Dr Paul D'Sylva, who is a director of Empire Equity Ltd, the corporate
advisory group that assisted to coordinate the bridge funding package. Dr
D'Sylva has led and arranged a number of funding transactions since 2008
for a diverse range of resource and energy companies. Dr D'Sylva is
Non-Executive Chairman of ASX listed silver producer Alycone Resources
Limited; and
* Dr Lars Schernikau is a coal marketing specialist with many years of coal
experience operating in South Africa, Asia and Europe. He is a co-founder
of Frankfurt listed HMS Bergbau AG, has served on the supervisory board of
Frankfurt listed South African coal producer IchorCoal NV for 2 years and
has held director, board and advisor positions for various coal producers
and coal marketing companies. He is also the author of "The Renaissance of
Steam Coal" (Springer, 2010).
The Board representative from the creditors group has not been finalised as
yet. Further details on the proposed new directors, including information
required under the AIM rules for companies, is set out in Schedule 1 further
below.
As previously announced as a condition to the funding, the resignation or
termination of the current CEO Mr Don Turvey, CFO Mr Lou van Vuuren and
Non-Executive Directors Mr Mike Kilbride and Mr Johan Bloemsma will occur on
closing of the transaction. This has now occurred. Mr Ron Chamberlain and Mr
Bernard Swanepoel have also tendered their resignations as Non-Executive
Directors to the Board. Village Main Reef Ltd will nominate a new
representative to the Board pursuant to the terms of their 2013 subscription
agreement.
Following the new appointments, the Board of the Company will be comprised of:
Dr Paul D'Sylva (Interim Executive Chairman)
Mr Peter Landau (Interim Executive Director)
Mr Connie Molusi (Non-Executive Director)
Dr Lars Schernikau (Non-Executive Director)
Creditors' representative (Non-Executive Director) - to be appointed
Village Main Reef representative (Non-Executive Director) - to be appointed
The management structure of the Company moving forward is still being
considered by the reconstituted Board, but will initially be overseen by Mr
Landau and Dr D'Sylva in temporary executive roles as well as current COO Mr
Johan Heystek at an operational level.
The Company also advises that Ms Jane Flegg will be appointed as Company
Secretary following the resignations of Mr Dennis Wilkins and Mr John Ribbons
as Joint Company Secretary. Ms Flegg has over 20 years' experience in finance
and administration. She has been a Corporate Advisor to several ASX and AIM
listed and unlisted resource companies, specialising in corporate and financial
management, compliance and company secretarial advice.
The Company's new registered office address and contact details are as follows:
Address: Ground Floor
1 Havelock Street
West Perth WA 6005
PO Box 684
West Perth WA 6005
Contact: Phone +61 8 9488 5220
Fax +61 8 9324 2400
ASX and AIM Share Trading Suspensions
The shares of the Company will remain suspended from trading on both the ASX
and AIM markets. The reconstituted Board of Directors will consider a decision
on seeking to lift the suspension of the shares following the closing of the
transaction and pending the provision of further clarification of its financial
position to the market.
Key Terms of the Bridge Funding
The funding has been provided by three unrelated institutional and industry
investors (the "Investors"). The Investors subscribed for 7.5 million unsecured
convertible promissory notes ("Notes") with a face value of A$1.00 at a
discounted issue price of A$0.6667 per Note and with a maturity date of 4
months post closing. The Investors have also undertaken to assist the Company
in undertaking a rights issue, currently proposed to raise up to A$28 million
at an offering price of A$0.01 per share (terms to be finally determined by the
Company and the underwriter engaged), including procuring underwriting of the
rights issue, with proceeds to be used to settle amounts owed by the Company to
various existing convertible note holders and other major creditors. The Notes
are only redeemable upon successful completion of the rights offer, being full
subscription including underwriter subscriptions, upon which the Investors will
have the option to redeem the Notes by either conversion into shares in the
Company (subject to obtaining necessary shareholder approvals) at a conversion
price equal to the rights offering price or request payment of the A$7.5
million face value in cash.
The existing convertible note holders, with outstanding principal and interest
of A$17 million, and certain other creditors of the Company, totaling
approximately A$4m, have entered into standstill agreements for up to 90 days
to allow for the completion of the rights offering or other recapitalisation.
Certain milestones relating to the proposed recapitalisation have been agreed
by the Investors and creditors during this 90 day period with failure to meet
these agreed milestones resulting in a default to the Standstill agreement.
The Investors will receive a 6% fee on the Investment Amount as well as 70
million options, subject to shareholder approval, for providing the $5 million.
Each option will be exercisable at the rights offering price with 3 years to
expiry. In the event that shareholder approval is not obtained to deliver the
options, $500,000 in cash will become payable to the Investors in lieu of the
options. 100 million shares will also be issued to a settlement agent and held
in escrow as collateral, either to be sold in the event of default with
proceeds to be paid to the Investors, or if no default occurs, transferred to
applicants under the rights issue.
Dr Lars Schernikau is associated with entities that subscribed for $2m of the
bridge funding referred to above whilst Mr Landau has a direct or indirect
beneficial interest in, or otherwise represents, approximately $3m in financing
creditors which have entered into the Standstill Agreements referred to above.
For and behalf of the Board
Dr Paul D'Sylva
Interim Executive Chairman
For further information please contact:
Media (Australia)
David Tasker
Professional Public Relations
T: +61 8 9388 0944
Nominated Advisor
Stuart Laing
RFC Ambrian Limited
T: +61 8 9480 2500
Brokers
Jonathan Williams
RFC Ambrian Ltd
T : +44 203 440 6817
Schedule 1: Further Details on the New Directors
Mr Peter Neil Landau (aged 42)
Directorships and partnerships held in the last five years are as follows:
Current directorships / partnerships Past directorships / partnerships
Aus-American Mining Corporation Ltd Beachcove Holdings Pty Ltd
Becca Holdings Pty Ltd Cape Lambert Resources Ltd
Becca Nominees Pty Ltd Continental Coal Ltd
Black Mountain Resources Ltd Eclipse Metals Ltd
Blue Mountain Mining Corporation Karmel Pty Ltd
Donnybrook Gold Pty Ltd Lacka Consulting Pty Ltd
Doull Consolidated Pty Ltd Paynes Find Gold Ltd
Doull Holdings Pty Ltd Waterloo Australia Pty Ltd
Komodo Capital Pty Ltd Yono Nominees Pty Ltd
Nkwe Platinum (Australia) Pty Ltd
Nkwe Platinum Ltd
Okap Ventures Pty Ltd
Range Resources Ltd
Westblade Pty Ltd
Mr. Landau resigned as a non-executive director of ASX-listed View Resources
Limited ("View") on 3 September 2007. On 8 February 2008 View announced the
appointment of administrators and the suspensions of trading of its shares on
the ASX following its inability to service debt. Receivers and managers were
appointed on 20 February 2008. A deed of company arrangement was subsequently
entered into by View and the assets of its subsidiary, View Gold Pty Ltd, were
sold with proceeds paid to secured creditors of View. View was later
restructured and recapitalized and reinstated to official quotation on the ASX.
Mr. Landau was a director of Continental Coal Ltd from 10 December 2002 until
his resignation on 14 May 2013. During this time he received director fees and
benefits as disclosed by the Company within its Annual Reports.
Certain of these benefits were subsequently converted to equity as per the
Company's Notice of Meeting dated 28 March 2013, Resolution 8.
Mr. Landau does not hold any interest in the issued capital of the Company.
Dr. Ashley Paul D'Sylva (Dr Paul D'Sylva) (aged 44)
Directorships and partnerships held in the last five years are as follows:
Current directorships / partnerships Past directorships / partnerships
Alcyone Resources Ltd Cambridge Partners Pty Ltd
Empire Capital Partners Pty Ltd Chemventures Pty Ltd
Empire Equity Ltd Exelgen Ltd
Global Higher Education Pty Ltd Mimotopes Pty Ltd
Kaboko Mining Ltd PharmAust Health Pty Ltd
Texas Silver Mines Pty Ltd RGM Ltd
TYVMG Pty Ltd
Waalitch Pty Ltd
Dr. D'Sylva joined the board of RGM Ltd on 30 December 2011 at the request of
key investors who had concerns about the management of RGM Ltd at the time. The
company was placed in voluntary administration on 28 May 2012 when the CEO was
charged with defrauding the Singapore Government (who was a key stakeholder in
the company) of approximately SG$30 million. The company was subsequently wound
up in August 2012.
Dr. D'Sylva does not hold any interest in the issued capital of the Company.
Dr. Lars Schernikau (aged 41)
Directorships and partnerships held in the last five years are as follows:
Current directorships / partnerships Past directorships / partnerships
AMS Asset Management AG N/A
ERAG Energie & Rohstoff AG
IMT Commodities Holding AG
IMT International Mining & Trading AG
IMT International Mining & Trading AG,
Zweigniederlassung Rapperswil
Schnerikau AG
Save for the aforementioned interest in the bridge funding package (which could
result in a future interest in the share capital of the Company), Dr.
Schernikau does not hold any interest in the issued capital of the Company.
There are no other matters in relation to the new directors that require
disclosure under the AIM Rules.
About Continental Coal Limited
Continental Coal Limited (ASX:CCC/AIM: COOL) is a South African thermal coal
producer with a portfolio of projects located in South Africa's major coal
fields including two operating mines, the Vlakvarkfontein and Penumbra Coal
Mines, producing approx. 2Mtpa of thermal coal for the export and domestic
markets. A Feasibility Study was also completed on a proposed third mine, the
De Wittekrans Coal Project.
Forward Looking Statement
This communication includes certain statements that may be deemed
"forward-looking statements" and information. All statements in this
communication, other than statements of historical facts, that address future
production, reserve potential, exploration drilling, exploitation activities
and events or developments that the Company expects to take place in the future
are forward-looking statements and information. Although the Company believes
the expectations expressed in such forward-looking statements and information
are based on reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ materially
from those in the forward-looking statements and information. Factors that
could cause actual results to differ materially from those in forward-looking
statements include market prices, exploitation and exploration successes,
drilling and development results, production rates and operating costs,
continued availability of capital and financing and general economic, market or
business conditions. Investors are cautioned that any such statements are not
guarantees of future performance and actual results or developments may differ
materially from those stated.