South Africa-based Ichor Coal said it will not extend its previously announced offer to acquire 100% of Australian coal producer Universal Coal (UNV) for A$80m ($58m), beyond 5 February 2016.
The company made a cash offer on 30 September 2015 for the share capital of UNV that it is not owned by the company already.
IchorCoal said that the weak balance sheet of UNV, the volatile exchange rate, as well as debt are some of the reasons for making the announcement.
Other factors that led to this decision are the delays in finalising a coal sales agreement by UNV with Eskom for the New Clydesdale Colliery (NCC) and the company’s reduced value proposition to IchorCoal in Australian dollar terms.
In November 2015, Coal of Africa (CoAL) also made a R1.3bn ($81.7m) offer to acquire UNV.
IchorCoal said in a statement: “IchorCoal holds 29.99% of the existing issued share capital of UNV and as UNV’s single largest shareholder, IchorCoal said it would be helpful to shareholders assessing the CoAL offer if further detail was provided about the debt burden CoAL will assume following its offer for UNV, given the Loan Note alternative inherent in the offer.
“Pro forma financials provided in the CoAL offer document imply gross debt of over $100m (before interest), with significant near term repayments, compared with only $59m in available cash.”
IchorCoal added it does not anticipate that UNV will pay material dividends by considering the latter’s own project development activities at NCC.
IchorCoal CEO Nonkululeko Nyembezi-Heita said: “IchorCoal retains a strategic shareholding in Universal Coal and will continue to work with Universal Coal as an independent listed company to maximise value for all shareholders.”