Investment firm Templar Capital, an independent creditor in the Optimum coal mine, has, in conjunction with the Optimum business rescue practitioners (BRPs) and other significant creditors, proposed a business rescue plan that is expected to be presented shortly to all of Optimum's creditors.
Optimum was placed into business rescue in February 2018 and various attempts have been made over the past two-and-a-half years by the BRPs to source sufficient post-start financing to bring the mine back into full production and/or to sell the mine or its assets to provide creditors with the best possible return.
Despite the efforts from all parties involved, various sales processes have come to nought, as the various bidders have failed to provide adequate verification of their funding capabilities.
The new business rescue plan proposes to convert its creditor claims against Optimum in the amount of about R1.3-billion into equity.
Further, the debt-to-equity conversion proposes that certain qualifying pre- and post-start creditors of Optimum will have the option to be settled on an agreed cents-in-the-rand basis, payable either in cash, or by converting their claims into non-voting ordinary shares.
The total equivalent value of Templar's debt-to-equity proposal is about R3.2-billion, excluding the capital required to bring the mine back into production.
Templar has offered to settle State-owned power utility Eskom's creditor claim in coal to be supplied in accordance with a separate coal supply agreement that is expected to generate a return for Eskom of R1-billion.
Templar and Optimum's BRPs have consulted with numerous other creditors in preparation of the plan.
Once the plan has been approved by the requisite majority of Optimum's creditors, Templar will implement the debt-to-equity proposal, conduct the relevant feasibility studies and seek the required regulatory approvals which will ultimately result in Templar investing the capital required to bring the mine back into production to the benefit of Optimum's historic creditors, union and non-union employees, the local community and the economy.
Optimum's BRPs, together with Templar and the National Union of Mineworkers, are also currently defending a liquidation application by Westdawn Investments (in liquidation) against Optimum.
Templar says it and the BRPs believe the liquidation of Optimum would be the worst outcome for all parties.
The liquidation scenario previously presented to creditors envisages a return of zero cents in the rand for Optimum's concurrent creditors, compared with returns of up to 100c offered in terms of the envisaged revised plan.
Templar intends to work with Optimum's historic suppliers to bring the mine back into sustainable production so as to stimulate the local economy.
It also intends to establish an employee share scheme and a community share scheme for the benefit of employees in the local community so as to enable all essential stakeholders to have a vested and rewarding interest in ensuring the success of the mine in future.