Continental's underwhelming shareholder response to capital raising

SOUTH African coal producer Continental Coal has received a paltry 10% take-up by shareholders to raise $35.1 million through a non-renounceable entitlement issue.

Lou Caruana

Shareholders will be entitled to acquire nine new shares for every one existing Continental share held at the record date of September 4, at an offer price of A0.5c per new share.

“The company advises that valid acceptances have been received from shareholders to subscribe for new shares to the value of $3,206,562 (641,312,422 new shares) representing a take-up of approximately 10%,” it said in a statement.

“The resultant shortfall of shares to the value of $31,969,610 will be placed by the underwriter to the entitlement issue, in accordance with the provisions of the prospectus dated 28 August 2014.”

Allotment of the new shares is scheduled to be completed on or about Monday, October 6, 2014.

Continental has three operating mines – Penumbra, Vlakvarkfontein and Ferreira – producing 2.2 million tonnes per annum of thermal coal for the export and domestic markets.

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