Atlantic Coal, a Pennsylvania anthracite miner, has suspended trading of its shares on AIM in order to pursue the acquisition of a larger rival. The acquisition would allow Atlantic Coal to add considerable anthracite reserves to its portfolio and maintain production levels past the end of mining at its existing Stockton mine – estimated to come in about nine years at current mining rates.
“For Atlantic Coal to continue operations with only one active mine is not in the company’s best interests,” said the circular. “Atlantic Coal will therefore need to acquire significant new anthracite mining assets in order to generate value for shareholders.”
Total consideration for the takeover would be about US$25 million, Atlantic Coal said, making the deal a reverse takeover under AIM rules. A reverse takeover occurs when the target is larger that the bidder with the result that the target shareholders become majority shareholders in the bidder, according to Practical Law. Atlantic Coal had a market capitalisation of £4.4 million before the trading suspension.
But while the in favour of the acquisition “the directors do not consider the significant expense and timeline associated with a reverse takeover to represent an efficient or cost effective way for Atlantic Coal to pursue an acquisition strategy,” Atlantic Coal said in a statement – leading the board to recommend delisting its shares from AIM.
Approval to cancel the company’s AIM listing, as well as to change the company name to Atlantic Carbon Group, will now be put to shareholders in a general meeting.
The company had first mentioned the possibility of delisting from AIM and renaming to Atlantic Carbon Group in early December when the board received a notice requisitioning a general meeting to discuss these matters by Stuart James Thomas, who owns 7.7% stake in the company and is also working as a consultant on the acquisition.
With the latest announcement, the board of directors has now thrown its weight – and its collective 13.16% stake in the company – behind Thomas’ resolutions.
Should the recommendations receive shareholder approval and the acquisition continue, the resulting company would operate three mines, two primary processing plants and a secondary processing plant, and a potential aggregate reserve of 9 million short t of anthracite.
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/coal/21122015/atlantic-coal-suspends-aim-listing-3325/