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CoAL’s offer for Universal falls through

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World Coal,

Coal of Africa’s (CoAL) offer for Universal Coal has fallen through on delays in signing a coal supply agreement (CSA) with South African state-owned utility Eskom for the New Clydesdale Colliery (NCC).

As a result, the start of mining at NCC did not begin in 1H16 as had been envisioned in CoAL’s offer document. Revenue from NCC’s CSA has been a key part in ensuring the enlarged group would have enough working capital to enable relisting on AIM.

As a result, CoAL’s directors could not meet the requirement for AIM readmission, resulting in the lapse of its offer.

The company said it was “disappointed” that it could not complete the offer by would consider making another offer for Universal in future.

For its part, Universal said it would consider any subsequent offer “on its merits by reference to the best interests of shareholders versus Universal’s strong prospects as an independent company, and its prospects for successful completion.”

Universal also said that it would begin underground mining operations at NCC despite not having a long-term CSA in place with Eskom. Coal would be supplies to the export thermal coal markets with the balance being sold in the domestic space, including coal sales to Eskom on a short-term supply basis.

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