Photo by: Duane Daws
Oakbay Investments Group’s Tegeta Exploration and Resources has concluded a conditional R2.15-billion transaction to buy all the assets of Optimum Holdings, which has been in business rescue since August. Oakbay is linked to the Gupta family, with Atul Gupta its chairperson and his nephew Varun Gupta CEO.
The deal was confirmed by the joint business rescue practitioners (BRPs), Piers Marsden and Peter van den Steen, and covers the Optimum coal mine, which supplies Eskom’s Hendrina power station, the Optimum coal terminal and Koornfontein Mines. Koornfontein Mines was not in business rescue, but has a contract with Eskom to supply coal to the Komati power station, until the end of 2015.
The deal was still subject to conditions, but was expected to be consummated by February.
Mining giant Glencore had hitherto owned both Koornfontein and Optimum, which had been struggling to meet the terms of a coal supply agreement with State-owned power utility Eskom. Optimum was currently supplying coal at R150/t, which was said to be below its cost of production.
The BRPs said the Tegeta offer represented a “compelling option” for all stakeholders, adding that the transaction would allow the BRPs to concurrently terminate the business rescue proceedings of Optimum Holdings and Optimum Mine.
The transaction, should it be concluded, would ensure that the operations of Optimum would continue under the ownership of Tegeta “as a going concern”, preserving 500 jobs.
Tegeta had also undertaken to honour the existing supply agreement with Eskom’s Hendrina power station. The company would assume responsibility for financing the operations with effect from January 1, 2016.
Tegeta would pay R2.15-billion for the assets and the proceeds would be used to part settle the existing bank debt of Optimum Holdings of around R2.55-billion. Glencore had agreed to advance about R400-million to Optimum Holdings in order to settle the balance of the bank debt.
Tegeta was formed in 2006 and holds two mining rights for coal – Brakfontein and Brakfontein Extension - in the Delmas area. It also has prospecting rights in Mpumalanga, Free State, KwaZulu-Natal and Limpopo.