Under the offer, Cumnock Coal shareholders will be paid 57c for each of their ordinary shares and the company will become a wholly owned subsidiary of Helios.
Cumnock Coal’s only source of coal production is from the Cumnock No. 1 mine, an opencut mine in the Hunter Valley coal fields, which is expected to exhaust its existing coal reserves at the pit and cease mining next year.
“Consequently, Cumnock Coal faces a somewhat uncertain future as a listed company,” Cumnock said in a statement to the Australian Securities Exchange.
“If it is not possible to extend the mine life of Cumnock Coal’s current operations when the existing coal reserves are exhausted during calendar 2008, Cumnock Coal will either need to be sold or placed in liquidation so that its surplus assets can be realised and net cash [after paying or providing for all liabilities] distributed to shareholders.”
The 57c offer represents a premium of approximately 97% over the closing price of Cumnock Coal’s shares on the day before the proposal was announced, and would be an attractive exit mechanism for remaining Cumnock Coal shareholders.
If Cumnock Coal shareholders approve the proposal at a meeting in August, it is anticipated that the proposal will be implemented and shareholders paid in early September 2007.
