Chris Wallin's QCoal aims for the Bounty but shareholders in the dark

Sarah Thompsonand Anthony Macdonald

Sep 3, 2019 — 4.24pm

Queensland coal miner Bounty Mining has received not one, but two seperate recapitalisation proposals from one of its rivals – and it's yet to breathe a word to its investors.

While Bounty shareholders were made aware of a recapitalisation and funding proposal from the group's major shareholder Amaroo Blackdown Investments, Street Talk has learned there have been two other proposals made by rival group QCoal, which is run by Queensland Rich Lister and mining magnate Chris Wallin and advised by SLM Corporate.

Coal miner Bounty Mining has been the subject of two recapitalisation proposals by QCoal. Glenn Campbell

But the two recapitalisation deals lobbed by QCoal are yet to make it into Bounty's ASX announcements. And the pugnacious law firm representing QCoal, Arnold Bloch Leibler, is not happy about the lack of disclosure.

In a letter from ABL partner Jeremy Leibler to Bounty chairman Robert Stewart sent on Tuesday, and seen by Street Talk, Leibler says Bounty and its directors "appear to have withheld information from the market".

In a comment to Street Talk, Stewart said Bounty's initial offer was "not sufficient" to meet its needs.

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"We received an indicative, non-binding proposal last week that was assessed and judged to be not sufficient to meet Bounty's needs," Stewart told Street Talk.

"We received a revised proposal last night that is currently being assessed by our advisors."

The timeline of events according to Leibler's letter is as follows.

On August 5, Bounty announced to the market that a recapitalisation and funding package had been proposed by major shareholder Amaroo and its related trading company Xcoal, subject to shareholder approval.

Then on August 27, QCoal launched its first indicative, non-binding recapitalisation proposal for Bounty, which it said had superior terms to the Amaroo proposal. A meeting between QCoal and Bounty was scheduled for the following day.

But that meeting didn't transpire. And on August 29, Bounty issued a notice to the market of an extraordinary general meeting for the purpose of obtaining shareholder approval for the Amaroo proposal. In that notice, Bounty said it had engaged BDO Corporate Finance as an independent expert to provide an opinion about whether Amaroo's proposal was fair and reasonable.

However, what was not disclosed was QCoal's alternative proposal that had been sent two days prior.

Since then, QCoal has lodged a further proposal, on September 2, that it says is also superior to the Amaroo offer and would not require the dilution of shareholders or approval in general meeting.

"Our client is concerned that the company and directors have asked shareholders to consider the Amaroo proposal based on incomplete information," Leibler wrote in his letter.

"The notice of meeting fails to disclose the existence of the initial QCoal proposal and suggests that the company has one option to avoid insolvency: the Amaroo proposal. That is incorrect."

"It is apparent that the directors knowingly made a recommendation to
shareholders based on dated information."

Leibler writes that Bounty should issue an announcement to the ASX without delay to update them on QCoal's proposal.