CoAL secures bucks for Universal deal

Coal of Africa has inked the final financing deal it needs to be be to buy out Universal Coal.

Johannesburg - Coal of Africa has inked the final financing deal it needs to be be to buy out Universal Coal, a move it believes will be the springboard for a new coal mining force.

CoAL said towards the end of November it was seeking to buy Universal, a deal that has the backing of shareholders owning just more than 40 percent in Universal and it says will be a South African first.

CoAL will pay $91 million in cash and shares for Universal.

Now, CoAL says it has reached an agreement with M&G Investment Management that will see M&G subscribe for new CoAL shares worth a total of $3 million.

This follows its equity boost from Singapore-based Yishun Brightrise, which will provide it with an injection of $14.7 million as well as a $10 million loan for 9.5 percent of CoAL’s shares.

The deal with M&G, which is not to be confused with the newspaper of the same name, is an international asset manager managing assets work more than $374.8 billion.

CoAL says in a statement issued on Monday that the 3 million “is the final element of the financing required by CoAL” to buy out Universal.

The investments are still subject to board approval.

CoAL notes buying Universal will provide it with immediate coal production and cash flow as well as a diversified portfolio of production, development and exploration projects with expected synergies to the existing CoAL business.

CoAL is an emerging South African focused coal producer, which trades shares in London, Johannesburg and Australia.

Its key assets include the Limpopo-based Vele and Makhado projects, which produce thermal and coking coal. It also operates the Greater Soutpansberg project. The company secured a new order mining right for Makhado in May, which saw its share soar on the JSE.

CEO David Brown says the “combination of Universal’s producing assets and CoAL’s development portfolio, coupled

with the excellent shareholder support ensures that the merger, as a first of its kind in the South African coal industry, will not be the last, we see the enlarged group as a springboard to creating a new coal mining force”.

IOL