Wednesday 02 November 2016 02:19 PM
Bathurst/Talley JV to pay $46 mln for Solid Energy mines
By Edwin Mitson
Nov. 2 (BusinessDesk) - The Bathurst Resources and Talley's Group joint venture, Phoenix Coal, is to pay $46 million to buy Solid Energy's Stockton, Rotowaro and Maramarua Mines.
The sale of the former state-owned enterprise's assets was confirmed on Monday, with ASX-listed Bathurst now setting out details of the transaction as it seeks to raise capital for the transaction from investors.
Phoenix Coal has also agreed to a semi-annual payment based on revenue from coal sold from the Stockton Mine, which will only apply if coal prices rise above $150 per tonne. This structure will be in place for four years and the maximum that will be paid out over that period is $50 million.
The joint venture's funds include $14 million from Talley's Group for a 35 percent stake, $26 million from Bathurst Resources for a 65 percent stake and a $15 million debt facility from lender Bank of New Zealand. This will meet the $46 million purchase price and ensure $9 million for working capital and bonds.
Bathurst is to raise the funds needed in three ways. It will raise A$11.3 million through the placement of redeemable convertible preference shares, which can be converted into an ordinary share in Bathurst following the completion of the transaction for 2.2 Australian cents. These will pay a preferential dividend of 8 percent a year if the sale is not unconditional on the day before the relevant dividend period, or 12 percent if the sale agreement goes unconditional and Bathurst elects to convert some, but not all of the preferential shares.
It will seek to raise $A7.5 million through four-year convertible notes which will pay a coupon of 8 percent per annum and can be converted at any time during the four-year term into ordinary Bathurst shares at a price of 3.75 Australian cents. The shares sank 24 percent to 5.2 cents.
Three-year bonds will also be issued to raise US$8.5 million, paying 10 percent interest. Each bond will cost US$100,000 and the interest will be paid semi-annually. In all, it is seeking to raise NZ$32 million.
The sale is conditional on gaining approval from the Overseas Investment Office. Bathurst's statement to investors says "the best guide that can be provided is that approval could be forthcoming at some point between the end of the first quarter of 2017 and the end of the second quarter of 2017."