Continental Coal has secured a short-term funding deal which will allow it to continue trading but at the expense of its chief executive and several other directors.
Continental Coal has secured a short-term funding deal that will allow it to continue trading, but at the expense of its chief executive and several other directors.
Continental told the market today it had executed a binding term sheet with UK corporate advisory firm Empire Equity to provide $5 million in bridge funding as it works to undertake a broader recapitalisation.
The deal is conditional on the resignation or termination of Continental chief executive Don Turvey, chairman Mike Kilbride, chief financial officer Lou van Vuuren and non-executive director Johan Bloemsma.
The South Africa-focused miner earlier this month warned shareholders it could be forced to call in administrators unless it could negotiate a refinancing arrangement with its debt providers.
The funds raised will be applied to general operating expenses and payments to creditors of the company that do not otherwise agree to standstill arrangements, allowing the company to continue trading as a going concern.
Empire will invest in 7.5 million unsecured convertible promissory notes with a face value of $1 at a discounted issue price of 66 cents per note.
It will receive a 6 per cent fee on the investment amount as well as 70 million options for providing the funds, subject to shareholder approval.
Empire has also agreed to assist Continental in undertaking a rights issue to raise up to $28 million at 1 cent per share, including procuring underwriting of the issue.
Continental has $US6 million in convertible bonds which were due to mature in November last year and a further $US10 million in bonds due to mature next month.
The West Perth-based company appointed an independent special committee in November last year to review refinancing proposals and engage with potential funders.
Continental said its financial position has been affected by lower than expected production at its Penumbra coal mine due to a lack of availability of continuous miners.
The company's outgoing directors will be replaced by former Continental executive director Peter Landau, Empire venture partner Paul D'Sylva, Genet South Africa chief executive Mike Gibson and a nominee from the company's group of creditors.
Continental's shares remain suspended from trading on the Australian Securities Exchange and the Alternative Investment Market.
Its shares last traded on the ASX at 2 cents.
