The frustrated rescue of the Gupta-owned Optimum Coal Mine can now commence in earnest after creditors voted overwhelmingly in favour of a new business rescue plan.
Lawyers for the business rescue practitioner, Bouwer van Niekerk, said 87% of the creditors voted in favour of the plan at a meeting on Monday, allowing it to be implemented.
“In essence, it envisages a debt-to-equity conversion of the creditors’ debt to take up shares in a new company to be formed, and for the mining assets and the business of the mine to be transferred to that company, as well as a capital injection to start up the mine again,” Van Niekerk said.
Such capital injection is expected to be anywhere from R300m to R500m and will be raised by Templar Capital, Optimum’s largest creditor which is owed R1.3bn. Templar Capital became involved when it acquired creditor Centaur Ventures’ claim against Optimum.
Optimum Coal, which includes the valuable coal export allocation at Richards Bay, was put into business rescue on February 19 2018, along with seven other Gupta-linked businesses, when banking facilities were withdrawn from the controversial family at the heart of SA’s state-capture saga.
Business rescue is a process provided for in the Companies Act to rehabilitate distressed companies as an alternative to liquidation.
Optimum’s rescue process was initially frustrated by a flood of litigation, often from Gupta associates, and later efforts to sell the business were hindered by the depressed coal market coupled with the acquisition cost of such a large coal operation.
“I think, in usual circumstances, a company would be liquidated earlier, but because of where the value lies in this mine, in the mining right and the export allocation, it simply did not make sense for the creditors to liquidate it,” Van Niekerk said.
Affected parties will now be able to choose whether they want their debt converted to equity or whether they want to be paid out. This includes former Optimum employees who were not paid for several months before being retrenched in May 2019.
There are exceptions for the conversion, including for Eskom, the second-largest creditor, which will instead receive money or coal over time.
Van Niekerk said the turnaround plan would not happen overnight, but the vote showed that the majority of the affected people have faith in the mine being rescued.
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