Gupta-owned Oakbay completes Optimum take over

Cape Town - Oakbay Investments has completed its acquisition of Optimum Coal Mine and six other target firms from Glencore for a total consideration of R2.15bn.

"The transaction demonstrates Oakbay’s firm commitment to South Africa," said Oakbay chief executive Nazeem Howa in a statement.
He said that Tegeta successfully met the Competition Tribunal’s condition that the merging parties avoid retrenching any employees of the target firms as a result of the transaction.

"As a result, Oakbay has successfully prevented the loss of more than 3 000 jobs, by avoiding what was an almost certain liquidation."
However, Howa added that these jobs along with the jobs of Oakbay’s more than 4 500 other employees, remain at risk if Oakbay is unsuccessful in re-establishing banking relationships with ABSA, Standard Bank, FNB and Nedbank.
“We are delighted to announce the completion of this acquisition which demonstrates that despite the threats by some of our country’s banks to cut their ties with Oakbay, we are committed to investment in South Africa and creating jobs.

"We also look forward to putting our proven turnaround skills to work and improving the fortunes of a business that prior to our acquisition was in business rescue.”
The acquisition was formally approved in February 2016 by the Competition Tribunal, who found that the transaction was unlikely to substantially prevent or lessen competition in the thermal coal market.

The merging parties are small players in the market and face competition from larger rivals such as Anglo American, Exxaro Coal and South 32 Ltd, who are credible alternative suppliers of thermal coal.
Howa indicated that Tegeta’s immediate priority for Optimum is to increase production levels at the mine and secure the continued employment of Optimum’s 3 000 employees.

"A core element of Oakbay’s business philosophy is to elicit more efficient levels of performance via its proven turnaround skills, which will immediately be put to work at Optimum."
With the transaction now completed, Tegeta is now set to supply a maximum of 5% of Eskom’s total coal supply, with the majority of the remaining 95% being supplied by the big players.

Business rescue practitioners said on Thursday that all outstanding obligations in respect of the sale of the assets of Optimum to Tegeta have been performed and the transaction will become effective on 15 April 2016.

"The conclusion of the transaction will result in the termination of the business rescue proceedings of Optimum Holdings."

It added that Optimum Coal Mine will operate as a going concern under the operational control of the business rescue practitioners until the practitioners are satisfied that Optimum Coal Mine is no longer financially distressed.

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