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Coalspur Annual Report 2014

by ahnationtalk on April 30, 2015592 Views

Directors’ Report And Md&A for The Year Ended December 31, 2014

Important Notice ‐ Strategic Review Process

On February 24, 2015, Coalspur announced that it had entered into a Scheme Implementation Agreement with KC Euroholdings S.à r.l. (“KCE”) under which, subject to the satisfaction or waiver (as applicable), of certain defined conditions precedent, KCE will acquire all of Coalspur’s shares through an Australian scheme of arrangement (“scheme”) for a cash consideration of A$0.023 per Coalspur share. The Scheme values the equity in Coalspur at approximately A$15 million on a fully diluted basis. KCE will also acquire all debts owing to EIG Global Energy Partners (“EIG”) and Borrowdale Park S.A. (“Borrowdale Park”).

A scheme booklet related to the Scheme (the “Scheme Booklet”) was registered with the Australian Securities and Investments Commission (“ASIC”) on March 18, 2015 and distributed to Coalspur Shareholders on March 23, 2015, in anticipation of a Scheme Meeting to be held on 22 April 2015.

If the Scheme is approved by the requisite majority of Coalspur Shareholders and by the Australian Federal Court, and if all other conditions to the Transaction are satisfied or waived (where applicable), all Coalspur shares will be transferred to KCE with effect from the Scheme implementation date and without the need for any further act by the Coalspur Shareholders (other than acts required to be performed by Coalspur, its Directors or officers, as attorney or agent for the Coalspur Shareholders). From the Scheme implementation date, Coalspur will become a wholly‐owned Subsidiary of KCE. Coalspur shares are expected to be delisted from ASX and TSX shortly after the implementation date.


On June 23, 2014, Coalspur announced that it would undertake a strategic review process overseen by a special committee comprised of independent Directors of Coalspur (“Special Committee”). This process was initiated due to the challenges experienced by Coalspur in its attempts to secure full funding for the development of its Vista thermal coal project. Despite being a world class asset, depressed global export thermal coal markets coupled with challenging capital markets meant that Coalspur had to rethink its approach to financing Vista, particularly given the context of its existing debt repayment obligations to EIG and Borrowdale Park.

On June 29, 2014, Coalspur retained Deutsche Bank to act as its financial adviser to provide management and the Special Committee with advice relating to the strategic review process and, along with Coalspur’s legal and other advisers, to assist in the assessment and negotiation of strategic alternatives for the Company.

During the strategic review process Coalspur and its advisers canvassed numerous strategic alternatives including, but not limited to:

  • fully funding Vista’s construction capital;
  • formation of a joint venture;
  • a merger or other business combination;
  • various forms of refinancing and recapitalization; and
  • the sale of some or all of Coalspur’s assets.

A significant number of parties were approached, ten of which demonstrated serious interest. Such parties were invited, under a strict confidentiality regime, to participate in management presentations, site visits, detailed information sharing and due diligence investigations. Final proposals were solicited throughout October and November 2014 culminating in detailed discussions with a select few parties, including KCE.

Upon concluding the strategic review process, the Coalspur Board selected and recommended the proposal by KCE, which is outlined in the Scheme Booklet, as the best proposal received in terms of maximising returns to Coalspur shareholders, in the absence of a superior proposal.

Importantly, BDO Corporate Finance (WA) Pty Ltd (“BDO”) , the Independent Expert engaged by Coalspur, has concluded that the Scheme is fair and reasonable and in the best interests of Coalspur Shareholders, in the absence of a superior offer.



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