Why Did Australian Pacific Coal Enter Receivership on Dartbrook JV Assets?

• Receivers and voluntary administrators appointed to Dartbrook Joint Venture assets
• Senior secured debt facility upsized and fully drawn during the quarter
• Company assumes no value in its 80% interest in Dartbrook Mine
• Group-level cash reserves of $4.3 million remain, but JV cash considered impaired
• No plans to raise further cash; solvency maintained but future uncertain

Receivership Triggered by Debt Default

Australian Pacific Coal Limited (ASX – AQC) has disclosed the appointment of receivers and managers over the assets of its Dartbrook Joint Venture (DJV) following a default on senior secured debt held with financier Vitol Asia Pte Ltd. The receivership, which includes the shares and property of AQC Dartbrook Pty Ltd, an 80% owned subsidiary, was initiated shortly after the June quarter ended, signaling a critical juncture for the company’s flagship coal project.

The receivership appointment was complemented by voluntary administration of Dartbrook’s operator entities, underscoring the severity of the financial distress. The company’s working assumption now is that its interest in the Dartbrook Mine holds no value, a stark reversal given recent development progress including the delivery of first coal.

Debt Facilities Fully Drawn Amid Escalating Financial Pressure

During the quarter, the Dartbrook Joint Venture drew down US$23.8 million from an upsized senior debt facility totaling US$120.7 million, alongside A$3.6 million from subordinated debt and a $5 million shareholder loan. All committed financing facilities were fully drawn by quarter-end, reflecting the JV’s reliance on external funding to support operations and development.

Despite holding $4.3 million in cash at the group level and $1 million at the joint venture level, the company has indicated that it does not expect to realise value from the JV cash reserves due to the receivership. The company has also provided a parent company guarantee for the entire senior debt, though Vitol has not yet called on this guarantee.

Operational and Regulatory Developments

Operationally, the Dartbrook Mine made significant strides during the quarter, including commissioning milestones and coal production. However, these achievements are overshadowed by the financial restructuring. The receivers and managers now control the application process for a six-year extension to the mine’s development approval, a key regulatory hurdle that will influence the project’s future viability.

Information on safety, environmental, and personnel matters at Dartbrook has been unavailable since the receivership appointment, adding to the uncertainty surrounding ongoing operations.

Corporate Outlook and Solvency

Australian Pacific Coal’s directors maintain that the company remains solvent based on current cash resources and operational expenses, despite the bleak outlook for the Dartbrook asset. The company has no plans to raise additional capital, reflecting a cautious stance amid unresolved financial and operational challenges.

Investors will be watching closely for updates on the receivership process, potential calls on the parent guarantee, and any strategic moves by the company to stabilise its position.

Bottom Line?

With Dartbrook’s future in limbo, Australian Pacific Coal’s next moves will be critical for its survival and shareholder value.

Questions in the middle?

• Will Vitol call on the parent company guarantee, and what would be the financial impact?
• What are the prospects for the receivership and voluntary administration to resolve the Dartbrook asset’s value?
• How will the regulatory extension application influence the mine’s operational future?