Continental unveils $35 million rights issue

West Perth-based coal miner Continental Coal has announced a non-renounceable $35.1 million rights issue as part of a recapitalisation and restructure.

The rights issue at 0.5 cents per share will be made on a nine-for-one basis and will be used for debt repayment, mining project development and working capital.

The company says the raising is necessary to complete a process of structural change expected to conclude in September. Business News reported in January that Continental had suspended trade in a bid to stave off administrators, with $US6 million in bonds that had been due to mature in November 2013 and another $US10 million due in February.

It received bridging finance later that month from Empire Equity.

Patersons Securities has been appointed to advise the company on the offer.

“In conjunction with the rights issue, the company has reached agreement with key unsecured convertible note, royalty holders and bridge financiers to repay in amounts outstanding on a reduced basis,” Continental said in a statement today.

“(Continental) has further negotiated a restructure of its EDF trading coal supply agreement.

“The net effect of this will be the substantial recapitalisation and restructure of the company’s balance sheet, which will substantially reduce the group’s total indebtedness.”

Continental shares remained suspended at the time of writing, and it projects its securities will resume trading at the end of September.