Ann: Third Supplementary Bidder's Statement , page-15

re: Ann: Third Supplementary Bidder's Sta... Found this in the Joburg Sunday Times, neatly summarises who is who in the zoo.

was accompanied by a photo of messrs, Mc master, tebeila and Miller, all cosied up.

Bear in mind Mr Miller was behind the original FSE deal with sekoko, so the wheel has turned full circle.



Coal rush ends in corporate wrestling

by Tina Weavind, June 02 2013, 10:09

WAITING: Brian McMaster, Tim Tebeila and Stephen Miller are heading up the Waterberg Coal Company with mining rights in Limpopo. Picture: KEVIN SUTHERLAND


AFTER nearly six years of wrangling, deal-making, deal-breaking and gag orders, the Waterberg Coal Company is expected to list on the JSE within weeks. Production from the 8000ha of coal-rich land adjacent to Exxarro’s massive Grootgeluk mine in Limpopo should begin at the end of 2014.

The company is a mind-bending amalgamation of Australia-and JSE-listed Firestone Energy, its BEE partner Sekoko, Ariona SA (an investment company purpose-created to get a stake in the project), Ariona’s majority owner — a murky entity called Haworth Finance Ltd — and Waterberg Coal, formerly Range River Gold, which bought out Ariona.

The deal also involved Mervyn Key, former director of the now-liquidated Pinnacle Point Holdings, who acted as a consultant on the local business environment to Stephen Miller, one of the top brass at Waterberg Coal. Mr Key was a director of Tollgate, which was liquidated in 1992. He was charged with fraud and theft of R28.6m in the Tollgate saga but was acquitted.

There is no doubt about the reason for the sweaty wrestle for control — prospecting on just two of Waterberg Coal’s eight farms has indicated an estimated 1.8-billion tons of coal. If, as expected, production reaches between 17 and 30-million tons a year, Waterberg Coal will become the fifth-biggest coal producer in the country, after BHP and ahead of Xstrata.

The company has arranged a 30-year off-take agreement with Eskom, starting with 10-million tons a year in 2015 and escalating to 17-million tons a year. The coal will be railed to power stations in Mpumalanga.

The Waterberg Coal deal is all but wrapped up, but a lot of corporate blood lies spilt on the boardroom floor.

Firestone and Sekoko, headed by schoolteacher-turned-millionaire-mining-magnate Tim Tebeila, entered into a joint venture to mine coal in the Waterberg in 2009.

Sekoko had the prospecting and mining rights and Firestone put up the cash for the initial operations, giving it 60% ownership of the asset. Mr Tebeila was made chairman of Firestone in 2011.

The project needed an investment of at least $400m, and in the middle of last year Ariona came to the rescue, promising to raise the cash in return for being able to buy a part of the action. In a series of transactions, Ariona bought 10% of Sekoko’s 40% stake for $19.7m and recapitalised Firestone to the tune of $29.5m, acquiring almost 25% of the company.

In December, Waterberg Coal bought out Ariona. The Waterberg Coal board then made a play for the rest of Firestone, announcing a bid of one share for every two Firestone shares, a 25% premium to Firestone’s December 13 close, valuing the company at A$30m (R270m.) Deloitte had valued the entire coal asset at R1.3bn, making Firestone’s 60% exposure worth closer to R780m — and shareholders were advised to reject the offer.

Waterberg Coal, with about 40% of Firestone’s shareholders on board through its stakes in Sekoko and Ariona, entered into a hostile takeover bid, offering an unconditional 1.25 Waterberg shares for every 20 Firestone shares. At the same time Haworth Finance bought 47% of Waterberg Coal.

Firestone CEO David Knox cried foul, claiming Firestone’s exposure to the asset had changed and that Waterberg’s initial bidder’s statement did not accurately describe what this would be. Mr Knox approached the Australian takeover panel to force Waterberg Coal to clear this issue up and to disclose the structure and ownership of Haworth Finance as well as the lenders involved in the convertible facility that Waterberg Coal had with Standard Bank.

In a supplementary bidder’s statement released on the ASX and the JSE on May 17, it turned out that if the deal went ahead as planned, Firestone shareholders would have an indirect exposure of about 14.5% in the Waterberg Project through their interest in Waterberg Coal. If Waterberg Coal did not get 100% of Firestone, the indirect economic interest of shareholders would be even less.

Haworth turned out to be a Virgin Islands-based discretionary trust, with Mr Miller — the executive director of Waterberg Coal who gets his advice from Mr Key — as a major beneficiary. Mr Key also holds a proxy interest in the company through his Seychelles-based Clifton Trust.

Finance for the deal has so far come from a $35m convertible loan involving Standard Bank ($14m), the Middle Eastern Sovereign Wealth Fund ($20m), and a London-based fund manager ($1m). A further $150m will be raised “shortly” according to Brian McMaster, one of Waterberg Coal’s executive directors. Presumably, the listing later this month will raise a significant amount of cash in equity.

The deal has all but been completed, but it is not over till the fat lady sings, and in this case that appears to be Firestone’s “cornerstone” investors coming up with some cash.

Last week, Firestone Energy advised shareholders that negotiations were being held to secure investors. However, they were not going to pony up any cash until the outcome of the takeover by Waterberg Coal was known, and a clear investment path had been laid out.

• This article was first published in Sunday Times: Business Times