COOL Conti.Coal

 
TIDMCOOL 
 
6 August 2014 
 
 
The Manager 
Company Announcements 
Australian Securities Exchange Limited 
Level 6, 20 Bridge Street 
Sydney NSW 2000 
 
 
By e-lodgement 
 
         FINANCING UPDATE - UNDERWRITTEN RIGHTS ISSUE TO RAISE A$35.1M 
 
Key points: 
 
  * Non-renounceable pro-rata rights issue to raise circa A$35.1m at an offer 
    price of A$0.005 per new share ("Offer") 
 
  * The Offer will be fully underwritten with an underwriting agreement to be 
    executed prior to lodgement of a prospectus in respect of the Offer 
    ("Prospectus") 
 
  * The Offer has received strong support from institutional and sophisticated 
    investors in Australia, Europe and South Africa as well as a number of 
    commodity trading groups and specialist coal mining investment funds 
 
  * A priority sub-underwriting agreement in respect of $25m of any shortfall 
    under the Offer ("Shortfall") has been executed and general 
    sub-underwriting agreements for an additional $10.1m of the Shortfall also 
    having been executed 
 
  * Proceeds from the Offer will be primarily used by the Company to: 
 
    - repay unsecured convertiblenoteholders, loans and royalty holders; 
 
    - repay bridging finance; 
 
    - reduce the Group's other borrowings; 
 
    - provide funds towards the development of the Company's advanced coal mining 
      projects; and 
 
    - provide working capital. 
 
  * Fund raising will allow the Company to complete its planned 
    recapitalisation and restructure of the Company's balance sheet, 
    substantially reducing the total indebtedness of the Company and its 
    subsidiaries ("Group") 
 
  * The Offer is being completed after reaching standstill agreements with key 
    unsecured convertible note and royalty holders and advanced negotiations of 
    its Coal Supply Agreement with EDF Trading and with ABSA Bank (in respect 
    to the debt financing for the Penumbra Coal Mine) being ongoing and 
    productive 
 
  * The Company anticipates that its securities will resume trading on both the 
    ASX and AIM markets by the end of September 2014 following completion of 
    the underwritten rights issue 
 
Continental Coal Limited (ASX:CCC / AIM:COOL) ("Continental" or "the Company") 
the South African thermal coal mining company is pleased to provide an update 
on its recapitalisation and restructuring of the Company's finances and 
announce a non-renounceable rights issue to raise approx. A$35.1m ("Rights 
Issue"). The Rights Issue will be fully underwritten with an underwriting 
agreement to be executed prior to lodgement of the Prospectus. The proceeds 
will be used to repay Group borrowings and provide funds towards the 
development of the Company's advanced thermal coal mining projects in South 
Africa. 
 
Rights Issue 
 
The non-renounceable Offer will be made to shareholders on a nine for one basis 
at the issue price of A$0.005 to raise $35.1m. The Rights Issue is subject to 
shareholder approval as a condition of the ASX granting the Company certain 
waivers to proceed with the offer and the Notice of Meeting will be despatched 
in due course. 
 
The Company is very pleased with the strong demand received from Australian, 
European and South African institutional and sophisticated investors as well as 
a number of global commodity trading groups and specialist coal mining 
investment funds. The Company believes that the level of demand reflects the 
underlying value of the Company's thermal coal mining operations and 
development assets in South Africa. 
 
Patersons Securities Limited have been appointed Corporate Adviser to the 
Company in respect of the Offer. Further information on the underwriting and 
sub-underwriting arrangements will be set out in the Prospectus. 
 
The Prospectus will be lodged with the ASX (and announced on AIM) on or about 
15 August 2014 and will be sent to eligible shareholders together with a 
personalised entitlement and acceptance form on that date. A copy of the 
Prospectus will also be available for review on the ASX website 
(www.asx.com.au) and on the Company's website (www.conticoal.com) after it is 
lodged with ASX. 
 
The net proceeds of the offer, will be used to repay the Company's unsecured 
convertible noteholders; repay short term loans and royalty holders; repay 
bridging finance secured in 2014, reduce the Group's other borrowings; provide 
funds towards the development of the Company's advanced coal mining projects 
including the De Wittekrans Coal Project; and provide additional working 
capital. 
 
The  Directors  of  the Company are extremely pleased that after several months 
of discussions and negotiations with its unsecured convertible noteholders, 
loan and royalty holders and other major debt providers that it has been able 
to advance its recapitalisation and restructure of the Company's balance sheet. 
Through the proposed Rights Issue, the Company will be able to substantially 
reduce the Group's total indebtedness and reposition the Company for 
sustainable growth and thermal coal production and sales in South Africa. 
Negotiations of the Coal Supply Agreement with EDF Trading and ABSA Bank (in 
respect to the debt financing for the Penumbra Coal Mine) are ongoing and are 
expected to be finalised before completion of the Rights Issue. 
 
Summary 
 
The Company has successfully arranged a fully underwritten non-renounceable 
pro-rata rights issue to raise approx. A$35.1m that will allow the Company to 
recapitalise its balance sheet. 
 
The offer will be fully underwritten and has received very strong support from 
institutional and sophisticated investors in Australia, Europe and South Africa 
as well as a number of commodity trading groups and specialist coal mining 
investment funds. 
 
In conjunction with the Rights Issue the Company has reached agreement with key 
unsecured convertible note, royalty holders and bridge financiers to repay in 
amounts outstanding on a reduced basis. It has further negotiated a restructure 
of its EDF Trading Coal Supply Agreement. 
 
The net effect of this will be the substantial recapitalisation and restructure 
of the Company's balance sheet, which will substantially reduce the Group's 
total indebtedness. 
 
The Company is further advanced in discussions with both EDF and ABSA Bank in 
respect to a restructuring of the debt funding facilities for the Coal Supply 
Agreement and the Penumbra Coal Mine, that if completed will further improve 
the Company's balance sheet and financial position. Full particulars of the 
current EDF and ABSA arrangements will be set out in the Prospectus. 
 
As a result of this recapitalisation, the Company anticipates that its 
securities will resume trading on both the ASX and AIM markets by the end of 
September 2014 following completion of the underwritten rights issue. 
 
 
For and on behalf of the Board 
 
 
Peter Landau 
Executive Director 
 
For further information please contact: 
 
Investors / Shareholders             Media 
Peter Landau                         David Tasker 
Continental Coal Limited             Professional Public Relations 
T: +618 9488 5220                    T: +618 9388 0944 
E: peter@conticoal.com               E: david.tasker@ppr.com.au 
 
 
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 with a mining right granted in September 2013. 
 
Forward Looking Statement 
 
Certain statements made during or in connection with this communication, 
including, without limitation, those concerning the economic outlook for the 
coal mining industry, expectations regarding coal prices, production, cash 
costs and other operating results, growth prospects and the outlook of 
Continental's operations including the likely commencement of commercial 
operations at De Wittekrans, its liquidity and the capital resources and 
expenditure, contain or comprise certain forward-looking statements regarding 
the Company's development and exploration operations, economic performance and 
financial condition. 
 
Although the Company believes that the expectations reflected in such 
forward-looking statements are reasonable, no assurance can be given that such 
expectations will prove to have been correct. Accordingly, results could differ 
materially from those set out in the forward-looking statements as a result of, 
among other factors, changes in economic and market conditions, success of 
business and operating initiatives, changes in the regulatory environment and 
other government actions, fluctuations in coal prices and exchange rates and 
business and operational risk management. For a discussion of such factors, 
refer to the Company's most recent annual report and half year report. The 
Company undertakes no obligation to update publicly or release any revisions to 
these forward-looking statements to reflect events or circumstances after 
today's date or to reflect the occurrence of unanticipated events. 
 
                                   3 
 
 
                       South Africa    Australia 
 
T +27 11 881 1420 F +27 11 881 1423    T +61 8 9488 5220 F +61 8 9324 2400 
                           W www.conticoal.com 
 
          9th Floor Fredman Towers,    Ground Floor, 1 Havelock Street, 
     13F redman Drive, Sandton 2196    West Perth, WA 6005 
 
        PO Box 787646, Sandton 2146    PO Box 684, West Perth WA 6872 
 
 
 
  Interim Executive Chairman: Dr Paul D'Sylva Interim Executive Director: Mr 
                                 Peter Landau 
 
       Non-Executive Directors: Mr Connie Molusi and Dr Lars Schernikau 
 
 
END 
 

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