Project Halo thrown by reports it may not be preferred bidder for Optimum assets

Project Halo, the consortium for the Gupta’s Optimum Coal, insists its R3bn offer for the assets remains the preferred bid despite reports to the contrary.

“As we stand today, we are their preferred bidder,” said Project Halo director Paul Buckley, addressing delegates at the IHS Markit 14th Annual Southern African Coal Conference on Thursday. “But we see things in the media that the process has been reopened. We haven’t been notified.”

In December, Project Halo released a statement to announce it had submitted the winning bid, of R3.05bn, for the assets. These include Optimum and Koornfontein coal mines as well as their prized export allocations at the Richards Bay Coal Terminal.

The business rescue practitioners have, however, confirmed to Business Day that they received other bids at the last minute. One is reportedly a government-owned coal company, African Exploration Mining and Finance Corporation.

Optimum and a handful of other Gupta-linked companies were put into business rescue in February 2018 after they were cut off from all transactional banking facilities.  

Business rescue is a provision of the Companies Act that allows for the rehabilitation of distressed entities. The rescue process at Optimum has, however, faced a number of delays. Employees have not been paid since October and have not reported to work since December.

Speaking to Business Day on condition of anonymity, the Optimum and Koornfontein workers expressed displeasure over the reopening of the bidding process, and accused the business rescue practitioners of dragging their feet. 

However, business rescue practitioner Louis Klopper said the practitioners had a duty to provide the best possible solution to the creditors.

Buckley said Project Halo remained determined to make a success of the Optimum deal.  “If for some unknown reason the bid is taken away from us, we are going to go for it again,” he said.

Project Halo, comprises a group of four shareholders: Buckley, Mbongiseni Duma, Nkanyiso Buthelezi and Julian Kidd. The four will hold 40% of the company, with the balance being owned by a women’s consortium, workers and the community.

The bid is fully funded by a international bank, Buckley said, but added that he could not name them yet. However, reports suggest the lender is Australian investment bank Macquarie.

As a preferred bidder, Project Halo said it has met Eskom, the largest creditor, to gain an understanding of what it wanted from the new owners.

The utility is facing a coal supply crunch and is seeking a long-term supply agreement from the new owners of optimum.

Buckley said Project Halo would prioritise supply to Eskom.

steynl@businesslive.co.za