IchorCoal offer ‘inadequate’, says Universal
PERTH (miningweekly.com) – South Africa-focused coal miner Universal Coal has brushed off an indicative takeover offer from shareholder IchorCoal, calling it inadequate and opportunistic.
Earlier this month, IchorCoal announced its intentions to make an all-cash offer of A$80-million to acquire all the outstanding shares in Universal, offering that company’s shareholders 16c a share.
Universal on Thursday said the company had formed a subcommittee to assess the offer and had come to the conclusion that the offer was highly conditional, inadequate and opportunistic.
It was felt that the offer price represented a low valuation multiple, based on Universal’s existing production and ignored the value of its near-term production and longer-term development pipeline.
The subcommittee also pointed out that there was no guarantee that a formal offer from IchorCoal would be forthcoming.
“After careful consideration, the subcommittee is unanimous that Ichor’s proposed offer does not reflect the inherent value of Universal.
“IchorCoal appears to have understated production figures from the Kangala colliery, which is already highly cash flow generative. In addition, the offer does not adequately value the material earnings impact that the company’s next operation, the New Clydesdale colliery, is expected to deliver when it comes on stream later this year,” said Universal nonexecutive chairperson John Hopkins.
He added that, to provide all shareholders with a clear and independent view of the company’s value, Universal has appointed KPMG Financial Advisory Services to prepare an independent expert report to assess if the offer was fair and reasonable.
Universal shareholders have, meanwhile, been urged not to take any action on the proposed offer from IchorCoal.
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