Universal is a more attractive investment at present

John Meyer of SP Angel said in a note that Universal would benefit from the recent improvement in global coal prices once it had contracts in place, so it was obvious why CoAL wanted it.

“But it would have added debt on debt which would take years to pay down before returns to shareholders,” says Meyer.

“Sadly for CoAL, its coking coal asset does not look like particularly good quality, according to our sources, and the failure to acquire Universal Coal leaves the company without a compelling portfolio.



CoAL: Where to now?
http://www.financialmail.co.za/moneyinvesting/2016/07/29/coal-where-to-now

The collapse of the takeover bid by Coal of Africa (CoAL) for Universal Coal leaves a question mark over how CoAL will generate cash flows for its immediate needs.

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Since the end of June, CoAL’s shares on the ASX have dropped to A$0.06 from A$0.10 and Universal’s shares to A$0.135 from A$0.20. Of the two, Universal is a more attractive investment at present.