Continental on debt free path

CONTINENTAL Coal’s path to being debt free received a shot in the arm yesterday when a consortium headed by Ivory Mint Holdings forwarded the first $US5 million ($A6.4 million) of the $75 million for which it agreed to buy the struggling Aussie junior’s South African assets.

Anthony Barich

Continental said in its quarterly last month that the transaction would leave the company debt free with excess cash reserves and the ability to pursue new opportunities.

The company announced the completion of its rights issue supplementary prospectus with 800 million ordinary shares being issued at $0.005, raising $A4 million before costs.

Ivory Mint and investors introduced by it subscribed for 400 million shares as part of the transaction.

The $5 million will go to Continental as an unsecured 10% coupon loan converting to either sale proceeds or a coal offtake, depending on the final structure utilised by Ivory Mint, in financing the acquisition of the Continental Coal South Africa 74% interest.

Continental will commensurate with the additional funding from Ivory Mint and provide additional funding to its 74% owned subsidiary to ensure the sale process can proceed with the requisite funding and financing in place.

Continental Coal has two operating mines in South Africa, Vlakvarkfontein and Penumbra, which produce for export and domestic sale.

The purchase price included settlement of the Absa Bank and EDF loans. Continental has been negotiating with the business rescue practitioners appointed by Absa and EDF over the conditions of paying out the debt facilities in conjunction with the 74% sale process.

Continental has also commenced looking at a number of strategic opportunities with Ivory Mint in the energy sector.