Buyout, article from Edmonton Journal, pub. yesterday EDMONTON - Coalspur Mines Ltd., the cash-strapped Vancouver developer behind the proposed $870-million Vista thermal coal mine at Hinton, has agreed to be acquired by an affiliate of major U.S. coal producer Cline Group LLC.
KC Euroholdings, a Cline Group affiliate, is seeking to acquire all outstanding shares of Coalspur, Coalspur announced this week.
“Cline is an industry leader with the technical capability and financial capacity to bring Vista into production,” Gill Winckler, Coalspur’s president and CEO, said in a news release.
The Vista mine, Coalspur’s flagship project and main asset, would be constructed in Yellowhead County east of Hinton.
Coalspur announced last June it was delaying the construction start because of funding challenges related to low prices for thermal coal.
Paul Vining, CEO of KC Euroholdings, said the acquisition of Vista “will combine well with our recent purchase of the Donkin mine in Nova Scotia, and advances our strategy to service growing international markets through a low-cost coal production platform.”
The Cline Group is a private company founded by coal entrepreneur Chris Cline, who is credited with reviving the coal industry in Illinois.
Cline Group subsidiaries and affiliates own 86 per cent of Foresight Energy, a publicly traded U.S. thermal coal producer with 2014 earnings of $404 million US.
KC Euroholdings will offer Coalspur shareholders a cash payment of slightly more than two cents per share. The total equity value would be around $14.7 million.
In a separate deal, KC Euroholdings has agreed to purchase secured debt from Coalspur’s senior creditor, EIG Global Energy Partners.
Coalspur’s board supports the share transaction, as does major shareholder Borrowdale Park. Other shareholders are being encouraged to accept the offer.
“This transaction does ensure a cash payment to shareholders, and there’s just no guarantees if they vote against it if they will get anything for their shares,” Coalspur spokesman Ryan Walchuck said from Vancouver.
“Coal prices are tough, but our understanding is that Cline has a long-term view to coal. They’re not in this to not develop (Vista) or not make money off of it.”
The transaction ends a strategic review process that was started last June.
The aim was to find full funding for Vista, sell some or all of Coalspur’s assets, sell the entire company, or find a merger or other third-party transaction for refinancing and/or recapitalization.
With approval from EIG, Coalspur brought in Deutsche Bank as financial adviser and conducted a search for suitors.
A list of 50 interested parties was pared to 10 before the KC Euroholdings proposal was identified as the best offer, Walchuck said.
Information on the transaction will be mailed to shareholders by mid-March. A vote will be held at a meeting in April. The deal is expected to close in May.