The South Gauteng High Court in Johannesburg has placed Arnot OpCo into business rescue just months after the shuttered mine revived operations and supply of coal to Eskom.
In a judgment handed down on Monday, the Salungano Group – the 50% owner of Arnot – was granted its application to have the operation placed under supervision and business rescue proceedings in terms of the Companies Act.
Salungano said business operations of the mine will continue as usual, including the supply of coal into the Arnot power station.
"Shareholders are reminded that Arnot OpCo has been in financial distress for a prolonged period, and the option of business rescue is considered the most appropriate under the circumstances," Salungano, formerly known as Wescoal, said in a statement.
"Salungano Group is of the firm belief that a business rescue plan could facilitate a successful turnaround of the business."
The Arnot mine was previously owned by Exxaro Resources and was shuttered in 2015 after a long-term supply agreement with Eskom expired and wasn't renewed.
Efforts by former Exxaro employees of the mine saw a deal in which these employees became joint shareholders with Wescoal in Arnot OpCo and production activities at the mine recommenced in February this year.
In court papers, Wescoal argued that Arnot OpCo was financially distressed as a result of mismanagement of the company, including the blurring of lines between rehabilitation and reestablishment costs for the mine.
Arnot InvestCo – which is owned by the former employees and is the other 50% shareholder in the business – however opposed the application and accused Wescoal of wanting to control Arnot OpCo and unilaterally refusing to comply with its funding obligations to the business.
Respondents to the business rescue have been ordered to pay the costs of opposition to the application jointly and severally.
The Salungano Group’s investment in Arnot was fully impaired in the annual financial statements for the year ended in March 2022 due to the uncertainties around funding of the operation.