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Singaporean investors buys stake in CoAL

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World Coal,

Yishun Brightrise Investment, a Singaporean private investment company, is to acquire 9.5% of Coal of Africa Ltd (CoAL) for £9.4 million (about US$14.7 million. The proceeds will be used to finance preconstruction costs at the Makhado metallurgical and thermal coal project.

Yishun has also expressed an intention to buy a strategic interest in the Makhado project, said CoAL in a press release, with discussions to start “in due course”.

“The package being discussed includes an equity investment in the Makhado project, the provision of a shareholder loan on commercial terms, providing the debt required for the development of the colliery and the award of the Makhado project engineering, procurement and construction contract on commercial terms,” CoAL said.

Shareholder approval for the deal is required and will be sought at an extraordinary general meeting expected with 60 days.

CoAL and Yishun has also entered into a loan agreement “in connection with these matters”, as part of which Yishun will provide CoAL with about £6.4 million (US$10 million) on condition of shareholder approval of Yishun’s stock purchase.

“Yishun’s investment in CoAL, combined with the US$10 million load to the company, represents a significant step forward in the process to identify a strategic partner for our flagship Makhado project,” said David Brown, CEO of CoAL. “The company looks forward to progressing negotiations with Yishun or its related parties in order to further their potential investment in the project.”

"Today’s funding agreement provides sufficient money to see [CoAL] easily to the planned start of construction of Makhado in 2H2016," said a note from asset management firm, Mirabaud. "Equally important from a long-term perspective, it lines up a potential strategic funding partner for the project, thus answering one [...] key questions for CZA: how will it fund the ~US$433m needed to build Makhado?"

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