The Coal Trader

MC Mining Takeover Offer: Investors Advised to Wait as Minority Share Price Jumps

Australian coal company MC Mining has received a A$65.2m ($42.3m) takeover offer from a group representing 64.3% of its shareholders, sparking a 7% share price increase. However, the company’s independent board committee advises minority investors to hold off on any action until they’ve fully reviewed the bid.

The offer comes from Goldway Capital Investment (GCI) Limited, which already owns 64.3% of MC Mining. They’re proposing to acquire the remaining 35.7% at A$0.16/share, valuing the company at A$65.2m. This represents a 14% premium over the February 1st share price.

GCI justifies their offer by highlighting MC Mining’s financial challenges. The company has accumulated A$10.25m in net debt and faces a significant funding gap for its flagship Makhado coal project (estimated peak requirement of US$98.0m, over 250% of MC Mining’s current market cap). Additionally, GCI notes the negative sentiment surrounding the coal sector, making it harder for the company to secure financing.

MC Mining’s Makhado project is currently under construction and expected to start exporting metallurgical coal in mid-2025. Despite raising US$500m from investors since 2010, the company hasn’t paid any dividends.

If successful, GCI plans to delist MC Mining from the Australian, Johannesburg, and London stock exchanges. Their consortium includes prominent South African companies like Senosi Group (23.38% stake) and Dendocept (6.93%).

While the offer promises a premium, MC Mining’s board urges minority shareholders to wait before making any decisions. The independent committee will thoroughly assess the bid and advise shareholders on the best course of action.

This takeover attempt highlights the ongoing challenges faced by coal companies in securing funding and navigating negative market sentiment. The outcome of this bid will be closely watched by industry stakeholders and MC Mining investors alike.