Bathurst/Talley joint venture to pay $46 million for Solid Energy mines

The Bathurst Resources and Talley's Group joint venture, Phoenix Coal, is to pay $46 million to buy Solid Energy's Stockton, Rotowaro and Maramarua Mines.

The sale of the former state-owned enterprise's assets was confirmed on Monday, with ASX-listed Bathurst now setting out details of the transaction as it seeks to raise capital for the transaction from investors.

Phoenix Coal has also agreed to a semi-annual payment based on revenue from coal sold from the Stockton Mine, which will only apply if coal prices rise above $150 a tonne. This structure will be in place for four years and the maximum that will be paid out over that period is $50 million.

The joint venture's funds include $14 million from Talley's Group for a 35% stake, $26 million from Bathurst Resources for a 65%  and a $15 million debt facility from lender Bank of New Zealand. This will meet the $46 million purchase price and ensure $9 million for working capital and bonds.

Bathurst is to raise the funds needed in three ways. It will raise $A11.3 million through the placement of redeemable convertible preference shares, which can be converted into an ordinary share in Bathurst following the completion of the transaction for 2.2Ac.

These will pay a preferential dividend of 8% a year if the sale is not unconditional on the day before the relevant dividend period, or 12% if the sale agreement goes unconditional and Bathurst elects to convert some, but not all of the preferential shares.

It will seek to raise $A7.5 million through four-year convertible notes which will pay a coupon of 8% a year and can be converted at any time during the four-year term into ordinary Bathurst shares at a price of 3.75Ac. The shares sank 24% to 5.2c.

Three-year bonds will also be issued to raise $US8.5 million, paying 10% interest. Each bond will cost $US100,000 and the interest will be paid semi-annually. In all, it is seeking to raise $NZ32 million.

The sale is conditional on gaining approval from the Overseas Investment Office. Bathurst says "the best guide that can be provided is that approval could be forthcoming at some point between the end of the first quarter of 2017 and the end of the second quarter of 2017."

(BusinessDesk)