Universal Coal Provides Update On Power Origin Development Private Placement

Sep. 03, 2012 7:49 PM ET
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Universal Coal (ASX: UNV) has provided an update to the market regarding a private placement to Hong Kong based investor, Ning Yat Hoi's Power Origin Developments.

In mid-August Universal Coal raised A$2 million of a proposed $10 million investment from Power Origin - for up to a 19.99% stake.

Power Origin and Universal had agreed to an extension until 31 August 2012 in order for Power Origin to satisfy certain conditions precedents in relation to the further tranches of the private placement.

As at close of business on 31 August 2012, the company notes that certain conditions precedent were not satisfied by Power Origin and therefore the agreement has now expired.

The company has subsequently been notified of a request by Power Origin for a further extension until late September 2012 in order to complete the proposed transaction.

The company is currently considering this request so as to ensure deal pricing protection is preserved having regards to current market trading conditions. The company will further update the market in due course.

Kangala funding update

In other Universal Coal news, the company has recently completed a formal competitive debt tender process for Kangala involving seven banks.

Kangala has been tipped as one of the major drivers of value in the shorter term for the company.

This tender process has determined that Kangala will be funded on a minimum debt level of 60%.

The final terms and mandate are being completed with the successful bank, and it is expected details of the debt funding will be released to the market by mid September.

Importantly Universal Coal added that they were 'very happy' with the debt process, as it confirmed the strength of the Kangala project to enable greater debt carrying capacity, which has reduced the expected equity need for the project.

Project finance is expected to be in place by early November, matched with Universal's equity component currently being secured by the company.

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