Embattled collier Continental Coal has struck a $70 million deal to offload its interest in its South African subsidiary, leaving the company debt free and with excess cash reserves.
Embattled collier Continental Coal has struck a $72 million deal to offload its interest in its South African subsidiary, leaving the company debt free and with excess cash reserves.
The company’s 74 per cent stake in its namesake Continental Coal will be sold to South African oil and energy fund LSP Energy pending due diligence, settlement of debt positions and passing of relevant resolutions.
The deal also hinges on South African government, ministerial and regulatory approval.
Continental has two operating coal mines in South Africa, with production of 2 million tonnes per annum of thermal coal.
The West Perth-based firmed has struggled this year after suspending trade in January to avoid administration, following a share price fall of nearly 70 per cent during 2013.
The company had $US16 million in bonds due to mature in late 2013 and early 2014.
In February, it received bridging finance from Empire Equity, and announced a $35.1 million rights issue in August.
Continental will issue a supplementary prospectus for the issue, with the closing date planned to be December 1.