Optimum Coal Holdings was the parent company of Optimum Coal Mine, Koornfontein Mine and Optimum Coal Terminal. The Group supplied coal to 3 of Eskom’s strategic powerplants, and as a result the matter had national significance.
On the 4th of August 2015, the board of directors and management resolved to place both the companies in Business Rescue. This was as a result of historical operational and financial difficulties and extremely difficult coal market conditions.
- Onerous long-term supply contract with its major customer.
- Significant financial penalty of over R2 billion was placed on the company.
- Increasing costs of mining and fixed selling price to cover increasing costs, resulting in significant financial losses.
- Deterioration in the export coal price.
- Shareholders not willing to provide further funding to support loss making companies.
- Initiated negotiations on supply contract pricing.
- Enter into an accelerated sales process in order to find a strategic investor.
A strategic investor was found to settle the senior bank debt of R2.5 billion.
Over 3 000 employee and contractor jobs were saved.