The Australian Pacific Coal Ltd (ASX: AQC) share price has separated itself from the pack on Wednesday.
Whilst the bolus of the ASX is trading in the red today, Australian Pacific shares are up 28% following a company announcement.
What did Australian Pacific Coal announce?
The company provided an update on its fully underwritten 5.83 for 1 renounceable entitlement offer announced earlier this month.
It actually provided the entitlement offer booklet containing all of the issue's details for investor perusal as well.
There's a bit of background to the company's route to seed capital. First, it proposed to sell its Dartbrook coal mine in the Hunter Valley, NSW to Trepang Services Pty Ltd earlier this year.
This was made on the grounds that certain liabilities owed to Trepang would be repaid or dealt with.
However, Trepang pulled its deal as Australian Pacific purportedly couldn't get shareholder approval, or at least in time for Trepang's deadline.
Whilst doing its due diligence for the Trepang deal, however, the company's board noted there was no fallback plan in the event Trepang did pull out.
This created a dilemma for Australia Pacific, seeing as it still owes Trepang the debt, except had no means to service the liability.
Hence it announced the entitlement offer in order to raise $100 million to fully repay its debt to Trepang and also for additional working capital.
Clarity on Dartbrook
Investors appear to have bought in on clarity around the Dartbrook mine as well. Referring to progress here, Australia Pacific said:
In conjunction with the launch of the Entitlement Offer, the Company has entered into a non-binding agreement with M Resources Pty Ltd, an entity associated with Matthew Latimore, with respect to a proposed 50:50 joint venture for the operation of the Dartbrook mine and for potential future mine management services at the Dartbrook mine.
It did lay down a bed of caution, however:
Given the proposed arrangements with M Resources are currently non-binding and subject to ongoing due diligence, there is no guarantee that the partnership with M Resources will eventuate, and shareholders are cautioned against placing significant emphasis on any transaction with M Resources when subscribing for shares under the entitlement offer.
Meanwhile, the Australian Pacific Coal share price has surged more than 283% into the green this year to date.
