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