Energybuild agrees take over by its majority shareholder; ABERPERGWM MINE OPERATOR REVEALSpounds 10M REVENUEFALL.
THE BOARD of South Wales mining company Energybuild yesterday accepted an offer from a Canadian company on the day it announced a fall in profits.
The Aberpergwm mine operator, which is listed on the Alternative Investment Market, has recommended that shareholders accept an offer from Vancouver mining corporation, Western Coal Corp, in a deal that valued the company's entire share capital at pounds 54.4m.
With Western Coal Corp being listed on the Canadian stock market and Energybuild being incorporated into the Western group, it is likely that Energybuild would be de-listed.
The news came on the day that the company announced its annual results, which saw a fall in profits of 78.9% in the year to March 31 and a fall in revenue of nearly pounds 10m.
Company chairman Colin Cooke described the results for the period as "disappointing" in comparison to the previous year but are "understandable" taking into account the development of the Aberpergwm mine and the economic environment in which the firm operated.
Under the acquisition plans existing Energybuild shareholders will be issued with 8.6m Western Coal shares, representing a 3.1% shareholding, if the offer is accepted.
In order for the acquisition to go ahead, Energybuild shareholders must vote by a 75% majority at the company's annual meeting in July - but with majority shareholder Western Coal already owning 54.7% and the Energybuild board's endorsement, it is likely to go through.
Under the agreement, scheme shareholders will receive 0.0833 new Western Coal shares for every Energybuild share held and values each Energybuild share at around 24p based on the closing share price ofWestern of 288p on June 8 - the last dealing day prior to the announcement.
Energybuild also announced its final results for the nine months to March 31. The company published an operating profit of pounds 0.4m, a fall of 78.9% from pounds 1.9m compared to the year to June 30, 2009, on revenues of pounds 6.8m, compared to pounds 16.4m previously.
However, the operating profit represented a turnaround for the company from a loss before tax of pounds 0.99m for the six months to December 31.
Production fell from 190,000 tonnes of coal last year to 121,000 tonnes to March 2010.
The company had previously aimed for a production rate of 750,000 tonnes of coal annually by 2013.
Chairman Colin Cooke commented: "This proposal will assure Energybuild's future development by giving it improved access toWestern's greater coal expertise and financial resources.
"Based on current share prices the terms provide a premium for Energybuild shareholders and will allow them to retain their exposure to the coal mining industry."
Commenting on the outlook for the company in light of the financial results, Mr Cooke said that the company can increase production in the second half of the next financial year.
He said: "The key asset of the company is the Aberpergwm drift mine which remains in a development phase. Management are introducing new mining techniques and equipment while driving a new surface drift and accessing a second seam.
"These activities will benefit the operation in the future with increased production. Operational problems and difficult geology and equipment delays have meant production levels were lower in the period than expected and these issues will also affect the first half of the financial year to March 31, 2011.
"However, we believe we have overcome most of these issues and can increase production in the second half." Western Coal chief executive Keith Calder said: "Acquiring 100% of Energybuild fits in with our value accretive growth strategy.
"With a tremendous coal resource base on which to build Energybuild upon, we believe applyingWestern's considerable technical and financial strength will help in developing the project faster and achieve shareholder value sooner."
The Aberpergwm drift mine is in a development phase. Management are introducing new mining techniques while accessing a second seam