Continental Coal Ltd Continental Coal Executes Binding Term Sheet

 
TIDMCOOL 
 
29 January 2014 
 
By e-lodgment 
 
CONTINENTAL COAL EXECUTES BINDING TERM SHEET FOR $5 MILLION OF LIMITED RECOURSE 
                                BRIDGE FUNDING 
 
Continental Coal Limited (ASX: CCC; AIM: COOL) ("the Company") announces that 
it has executed a binding term sheet with UK corporate advisory firm, Empire 
Equity Limited ("Empire Equity"), to provide $5 million ("Investment Amount") 
of limited recourse bridge funding. The funds raised will be applied towards 
general operating expenses and payments to creditors of the Company that do not 
otherwise agree to standstill agreements, allowing the Company to continue 
trading as a going concern while it continues to seek to undertake a broader 
recapitalisation and restructure of the Company and its financial arrangements. 
 
Subject to finalising definitive documentation, Empire Equity and/or its 
nominees (the "Investors") will invest in 7.5 million unsecured convertible 
promissory notes ("Notes") with a face value of A$1.00 at a discounted issue 
price of A$0.6667 per Note and with a maturity date of 4 months post closing. 
The Investors have also undertaken to assist the Company in undertaking a 
rights issue currently proposed to raise up to A$28 million at an offering 
price of A$0.01 per share (terms to be finally determined by the Company and 
the underwriter engaged), including procuring underwriting of the rights issue, 
with proceeds to be used to settle amounts owed by the Company to various 
existing convertible note holders and other major creditors. The Notes are only 
redeemable upon successful completion of the rights offer, being full 
subscription including underwriter subscriptions, upon which the Investors will 
have the option to redeem the Notes by either conversion into shares in the 
Company (subject to obtaining necessary shareholder approvals) at a conversion 
price equal to the rights offering price or request payment of the A$7.5 
million face value in cash. The Investors are also required to procure 
standstill agreements for 90 days from convertible note holders and other major 
creditors of the Company to allow for the completion of the rights offering or 
other recapitalization. 
 
The Investors will receive a 6% fee on the Investment Amount as well as 70 
million options, subject to shareholder approval, for providing the $5 million. 
Each option will be exercisable at the rights offering price with 3 years to 
expiry. In the event that shareholder approval is not obtained to deliver the 
options, $500,000 in cash will become payable to the Investors in lieu of the 
options. 100 million shares will also be issued to a settlement agent and held 
in escrow as collateral, either to be sold in the event of default with 
proceeds to be paid to the Investors, or if no default occurs, transferred to 
applicants under the rights issue. 
 
Proposed Board and Management changes 
 
A condition to providing the funding is the resignation or termination of the 
CEO, CFO and non executive directors Mike Kilbride and Johan Bloemsma on 
closing. To join the Board on closing of the transaction and subject to any 
required regulatory approvals are: 
 
  * Peter Landau, who is a former executive director of the Company, having 
    resigned in May 2013. It is also noted that companies of which Mr Landau is 
    a director or major shareholder are significant trade creditors or the 
    Company, being owed approximately $2.8 million; 
 
  * Paul D'Sylva, who is the Venture Partner of Empire Equity; 
 
  * Mike Gibson, who is currently the CEO of Genet South Africa, a mineral 
    resources and mining service company; and 
 
  * a nominee from the creditors group. 
 
Further details on the proposed new directors, including information required 
under the AIM rules for companies, will be provided on or prior to their 
appointment. 
 
The management structure of the Company will be finalized after closing of the 
funding and further consideration by the new board. 
 
ASX and AIM Share Trading Suspensions 
 
The shares of the Company will remain suspended from trading on both the ASX 
and AIM markets. The reconstituted Board of Directors will consider a decision 
on seeking to lift the suspension of the shares following the closing of the 
transaction and pending the provision of further clarification of its financial 
position to the market. 
 
Indicative timing 
 
Closing is currently expected to take place with the delivery of the Investment 
Amount in cleared funds by Wednesday 29 January 2014 to a settlement/escrow 
agent who is to ensure payment to various trade creditors. The remaining funds 
will be deposited into the operating bank account of the Company to fund 
on-going operating expenses while it completes the proposed rights offering. 
 
For and behalf of the Board 
 
Don Turvey 
 
Chief Executive Officer 
 
For further information please contact: 
 
Investors/ shareholders 
Don Turvey 
Chief Executive Officer 
 
Lou van Vuuren 
Chief Financial Officer 
 
T: [phone] 
E: [e-mail] 
W: www.conticoal.com 
 
Media (Australia) 
David Tasker 
Professional Public Relations 
T: [phone] 
 
Nominated Advisor 
Stuart Laing 
RFC Ambrian Limited 
T: [phone] 
 
Brokers 
Jeremy Wrathall / Chris Sim                Jonathan Williams 
Investec Bank plc                          RFC Ambrian Ltd 
T: [phone]                        T: [phone] 
 
About Continental Coal Limited 
 
Continental Coal Limited (ASX:CCC/AIM: COOL) is a South African thermal coal 
producer with a portfolio of projects located in South Africa's major coal 
fields including three operating mines, the Vlakvarkfontein, Ferreira and 
Penumbra Coal Mines, producing approx. 2.2Mtpa of thermal coal for the export 
and domestic markets. A Feasibility Study was also completed on a proposed 
fourth mine, the De Wittekrans Coal Project. 
 
Forward Looking Statement 
 
This communication includes certain statements that may be deemed 
"forward-looking statements" and information. All statements in this 
communication, other than statements of historical facts, that address future 
production, reserve potential, exploration drilling, exploitation activities 
and events or developments that the Company expects to take place in the future 
are forward-looking statements and information. Although the Company believes 
the expectations expressed in such forward-looking statements and information 
are based on reasonable assumptions, such statements are not guarantees of 
future performance and actual results or developments may differ materially 
from those in the forward-looking statements and information. Factors that 
could cause actual results to differ materially from those in forward-looking 
statements include market prices, exploitation and exploration successes, 
drilling and development results, production rates and operating costs, 
continued availability of capital and financing and general economic, market or 
business conditions. Investors are cautioned that any such statements are not 
guarantees of future performance and actual results or developments may differ 
materially from those stated. 
 
 
 
END