29 January 2014
By e-lodgment
CONTINENTAL COAL EXECUTES BINDING TERM SHEET FOR $5 MILLION OF LIMITED RECOURSE
BRIDGE FUNDING
Continental Coal Limited (ASX: CCC; AIM: COOL) ("the Company") announces that
it has executed a binding term sheet with UK corporate advisory firm, Empire
Equity Limited ("Empire Equity"), to provide $5 million ("Investment Amount")
of limited recourse bridge funding. The funds raised will be applied towards
general operating expenses and payments to creditors of the Company that do not
otherwise agree to standstill agreements, allowing the Company to continue
trading as a going concern while it continues to seek to undertake a broader
recapitalisation and restructure of the Company and its financial arrangements.
Subject to finalising definitive documentation, Empire Equity and/or its
nominees (the "Investors") will invest in 7.5 million unsecured convertible
promissory notes ("Notes") with a face value of A$1.00 at a discounted issue
price of A$0.6667 per Note and with a maturity date of 4 months post closing.
The Investors have also undertaken to assist the Company in undertaking a
rights issue currently proposed to raise up to A$28 million at an offering
price of A$0.01 per share (terms to be finally determined by the Company and
the underwriter engaged), including procuring underwriting of the rights issue,
with proceeds to be used to settle amounts owed by the Company to various
existing convertible note holders and other major creditors. The Notes are only
redeemable upon successful completion of the rights offer, being full
subscription including underwriter subscriptions, upon which the Investors will
have the option to redeem the Notes by either conversion into shares in the
Company (subject to obtaining necessary shareholder approvals) at a conversion
price equal to the rights offering price or request payment of the A$7.5
million face value in cash. The Investors are also required to procure
standstill agreements for 90 days from convertible note holders and other major
creditors of the Company to allow for the completion of the rights offering or
other recapitalization.
The Investors will receive a 6% fee on the Investment Amount as well as 70
million options, subject to shareholder approval, for providing the $5 million.
Each option will be exercisable at the rights offering price with 3 years to
expiry. In the event that shareholder approval is not obtained to deliver the
options, $500,000 in cash will become payable to the Investors in lieu of the
options. 100 million shares will also be issued to a settlement agent and held
in escrow as collateral, either to be sold in the event of default with
proceeds to be paid to the Investors, or if no default occurs, transferred to
applicants under the rights issue.
Proposed Board and Management changes
A condition to providing the funding is the resignation or termination of the
CEO, CFO and non executive directors Mike Kilbride and Johan Bloemsma on
closing. To join the Board on closing of the transaction and subject to any
required regulatory approvals are:
* Peter Landau, who is a former executive director of the Company, having
resigned in May 2013. It is also noted that companies of which Mr Landau is
a director or major shareholder are significant trade creditors or the
Company, being owed approximately $2.8 million;
* Paul D'Sylva, who is the Venture Partner of Empire Equity;
* Mike Gibson, who is currently the CEO of Genet South Africa, a mineral
resources and mining service company; and
* a nominee from the creditors group.
Further details on the proposed new directors, including information required
under the AIM rules for companies, will be provided on or prior to their
appointment.
The management structure of the Company will be finalized after closing of the
funding and further consideration by the new board.
ASX and AIM Share Trading Suspensions
The shares of the Company will remain suspended from trading on both the ASX
and AIM markets. The reconstituted Board of Directors will consider a decision
on seeking to lift the suspension of the shares following the closing of the
transaction and pending the provision of further clarification of its financial
position to the market.
Indicative timing
Closing is currently expected to take place with the delivery of the Investment
Amount in cleared funds by Wednesday 29 January 2014 to a settlement/escrow
agent who is to ensure payment to various trade creditors. The remaining funds
will be deposited into the operating bank account of the Company to fund
on-going operating expenses while it completes the proposed rights offering.
For and behalf of the Board
Don Turvey
Chief Executive Officer
For further information please contact:
Investors/ shareholders
Don Turvey
Chief Executive Officer
Lou van Vuuren
Chief Financial Officer
T: +27 11 881 1429
E: admin@conticoal.com
W: www.conticoal.com
Media (Australia)
David Tasker
Professional Public Relations
T: +61 8 9388 0944
Nominated Advisor
Stuart Laing
RFC Ambrian Limited
T: +61 8 9480 2500
Brokers
Jeremy Wrathall / Chris Sim Jonathan Williams
Investec Bank plc RFC Ambrian Ltd
T: +44 20 7597 4000 T: +44 203 440 6817
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 three operating mines, the Vlakvarkfontein, Ferreira and
Penumbra Coal Mines, producing approx. 2.2Mtpa of thermal coal for the export
and domestic markets. A Feasibility Study was also completed on a proposed
fourth mine, the De Wittekrans Coal Project.
Forward Looking Statement
This communication includes certain statements that may be deemed
"forward-looking statements" and information. All statements in this
communication, other than statements of historical facts, that address future
production, reserve potential, exploration drilling, exploitation activities
and events or developments that the Company expects to take place in the future
are forward-looking statements and information. Although the Company believes
the expectations expressed in such forward-looking statements and information
are based on reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ materially
from those in the forward-looking statements and information. Factors that
could cause actual results to differ materially from those in forward-looking
statements include market prices, exploitation and exploration successes,
drilling and development results, production rates and operating costs,
continued availability of capital and financing and general economic, market or
business conditions. Investors are cautioned that any such statements are not
guarantees of future performance and actual results or developments may differ
materially from those stated.