9 June 2022, JOHANNESBURG – Liberty Coal (Pty) Ltd, via its parent company Liberty Energy, has today announced an open offer to all creditors of Optimum Coal Mine (OCM) to purchase creditors’ claims against OCM.

Liberty Energy is offering to purchase from each creditor of OCM (excluding related party OCM creditors and those creditors whose claims are contingent or disputed) its total monetary claims against OCM as at 28 September 2020.

All creditors of OCM have the option of an outright purchase equal to 20% of the total amount of its claim(s), which will be payable in cash within 10 business days. In the alternative, a creditor who was eligible to elect, and did elect, to exchange its claims for shares (Option A) in terms of the plan adopted on 28 September 2020, may choose to cede (sell) its claims against OCM incrementally for a purchase price equal to the compromised value of its total claim, whereby the purchase price will be payable in cash in consecutive monthly instalments over a five-year period.

One of OCM’s largest creditors is Eskom, which voted in favour of OCM’s business rescue plan in September 2020 which envisaged Liberty Coal acquiring OCM’s business and assets. Eskom accepted settlement of 20 cents in the rand payable over five years, with payments due to commence one year from implementation of the business rescue plan.

The open offer by Liberty Energy is intended to put creditors in a position whereby they have a mechanism to realise money now whilst there are delays with the implementation of the business rescue plan due to ongoing litigation. – therefore to the advantage of the creditors.

Daniel McGowan, CEO of acquirer Liberty Coal, explains that this offer is manifestly advantageous to creditors, including Eskom, and that in making the offer Liberty Coal has been encouraged to believe such an offer would be welcomed by OCM creditors, who have waited patitently for over 4 years for OCMs business rescue to realise a return to creditors.

“The main advantage to all creditors is that we will commence payments immediately on a monthly basis over a fixed period of time, or alternatively make payment in full for 20 cents in the Rand, whereas in terms of the business rescue plan, all creditors would receive an annual amount towards the value of their compromised claim subject to Liberty having made sufficient profit to pay such amounts. The main advantage to Eskom, is that the compromised value of their creditor claim of circa R255m which was due to be paid over 5 years, will be payable now in full”

“Simply put, Eskom will be paid the amount to which it has agreed but with payment made in full with the obvious cash flow advantage.”

“We have therefore been understandably disappointed that, notwithstanding Eskom’s formal support for Liberty’s proposed business rescue of OCM, it has now seemingly changed its stance and unofically chosen to support the National Prosecuting Authority’s (NPA) application for a preservation order of Optimum’s business and to rather potentially seek its forfeiture to the State. This application has been firmly opposed by most other parties affected, such as the National Union of Mineworkers and an additional 134 individual creditors of Optimum.”

“This almost unanimous support recognises that any delays in the implementation of the OCM business rescue plan serves only to defer employment opportunities and to deprive the local communities of much needed sustenance. The open offer will put money into the pockets of the previous employees and creditors who have had nothing for over four years in circumstances whereby Liberty Coal is taking on the additional commercial and legal risks of further challenges from the NPA.”

“In addition, without the open offer made by Liberty, all other creditors, including Eskom, will suffer potential delays to payment of the amounts due to them in terms of the approved business rescue plan – with the risk of potentially never receiving their due claim amounts at all,” says McGowan.

Eskom’s recognised creditor claims stems from contractual penalties which were initially disputed by OCM but eventually settled via arbitration which resulted in a settlement agreement.

“We remain committed to a successful rescue of Optimum Coal Mine, whether in terms of the adopted OCM Rescue Plan or any new business rescue plan that may be proposed and is acceptable to its creditors in future. However, we are acutely aware of the ongoing hardship and distress caused to many of Optimum’s creditors, local business and community stakeholders as a result of this latest derailment of the mine’s business rescue process,” McGowan concludes.