PERTH (miningweekly.com) – South Africa-focused coal miner Continental Coal has secured A$5-million in funding, but has lost its CEO and CFO in the process.

The ASX-listed miner, which has been in a trading halt since January 6, has executed a binding term sheet with UK-based Empire Equity for the A$5-million limited recourse bridge funding to cover general operating costs and payments to creditors.

Subject to the finalising of definitive documentation, Empire would invest in 7.5-million unsecured convertible promissory notes with a face value of A$1, at a discounted issue price of A$0.6667 per note, and with a maturity date of four months post closing.

Empire would also assist Continental in undertaking a rights issue to raise up to A$28-million at an offering price of 1c a share, with the proceeds to be used to settle debts to various existing convertible note holders and other major creditors.

The promissory notes would only become redeemable on the successful completion of the rights offer, with Empire having the option to redeem the notes by either conversion into shares, or the payment of A$7.5-million face value in cash.

Furthermore, Empire would receive a 6% fee on the investment amount and 70-million options, subject to shareholder approval. Each option would be exercisable at the rights offering price, with three years to expire.

In the event that shareholder approval was not obtained for the options, A$500 000 in cash would become payable to Empire in lieu of the options, while 100-million shares would also be issued to a settlement agent and held in escrow as collateral.

Meanwhile, Continental also reported on Wednesday that a condition of the funding was the resignation or termination of the CEO, CFO and nonexecutive directors Mike Kilbride and Johan Bloemsma on closing.

Former executive director Peter Landau would join the company on close of the transaction, along with Paul D’Sylva, a venture partner of Empire, Mike Gibson, the current CEO of Genet South Africa, and a nominee from the creditors group.

Continental said that its share trade on the ASX and Aim would remain suspended until after the close of the transaction, and pending the provision of further clarification on the company’s financial position.