Universal Coal is still waiting for a suitor to table an acceptable takeover bid
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One of the most pursued coal juniors is still trying to get its latest suitor to hand it a takeover offer it can accept.
Universal Coal is fielding its third takeover approach and flagged previously that it expected to receive a “firm” offer from this particular suitor by the end of February.
But it is yet to emerge, and the pair are still in negotiations.
In late October last year, Universal was told by a consortium of investors led by Ata Resources, a private entity incorporated in South Africa, that it planned to table an offer of 35c cash per share.
The offer values Universal at a nearly 17 per cent premium to its share price the day before it received the initial offer in September.
Universal’s share price is currently trading around the offer price.
The proposal, however, is still conditional upon the negotiation and execution of a transaction implementation agreement between Universal and the consortium.
The formal commitment comes after Ata Resources received promises from a second major shareholder of Universal that it would accept the offer.
Coal Development Holding, which has a 27.5 per cent stake, and Ichor Coal, which owns 29 per cent, have both agreed to vote in favour of the deal.
Between the two shareholders they have four directors on the eight-director board.
Universal CEO Tony Weber told Stockhead previously that the company was “significantly undervalued” relative to its Aussie peers because its mines were in South Africa.
“[The offer] is a premium to the share price, but you look at the cash we’ve been generating relative to other Australian companies, you see it is a significant discount to what an entity generating this kind of cash would be achieving if it was operating in Australia,” he said.
Universal’s latest financial reports shows it upped its net profit after tax by 361 per cent to $65.1m in the second half of 2018.
The company put the big increase down to “a bargain purchase” of $26.2m relating to the acquisition of the North Block Complex as well as an increase in operating profit, thanks to higher sales volumes and a better coal price.
Universal says this puts it on track to reach its sales target of 6 million tonnes for FY19.
The company’s goal is to grow its output to 10 million tonnes in 2020.
Stockhead is seeking comment.