Bounty funding saga comes to a head at general meeting

Coal operation at Mt Owen. Image: Glencore

Drama has escalated as Bounty Mining started negotiating a recapitalisation plan and new funding package with Amaroo Blackdown Investments.

In response to this proposal, QCoal Group has offered updated refinancing proposals to Bounty.

The funding package would be used for the company’s Glencore asset sale agreement, mine improvements and mine optimisation. However, there are conflicting reports regarding QCoal’s proposal.

Initially, Bounty failed to disclose the alternative proposals due to its conditional and non-binding nature.

However, QCoal maintains the offer is an $85 million binding and unconditional offer for secured finance and guarantee facility, which is “superior to the Amaroo proposal”.

QCoal’s $85 million offer includes a $60 million cash facility, which would result in liquidity for the company and does not rely on future contingent events to occur.

The company has claimed that the Amaroo proposal has the potential to be highly dilutive to shareholders, delivering control of Bounty to Amaroo, while QCoal’s proposal is not dilutive.

Amaroo’s proposal provides finance of $70.9 million, including an existing working capital facility of $35 million, an existing loan of approximately $930,000 and a secured convertible note facility of up to $35 million.

The convertible note is a form of short-term debt which will convert into equity.

Bounty also owes US$5.2 million ($7.84 million) to XCoal for prepaid coal sales due over the next four months.

The vote for the approval of the Amaroo proposal occurs today (September 30) at Bounty’s general meeting.

According to QCoal, its offer would not require shareholder approval.

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