Pacific Coal Resources Ltd. (TSXV: PAK) said June 28 that it has signed a memorandum of understanding in respect of the company’s port concession at Barranquilla in Colombia.
Under this deal, Pacific Coal will contribute the port concession to a joint venture company while the joint venture partner will provide the capital to develop the port, thereby meeting Pacific Coal’s obligations under the concession. At closing of the transaction, the joint venture company, which may be Pacific Coal’s subsidiary currently holding title to the concession, Sociedad Portuaria Terminal Las Flores S.A., will equally owned by Pacific Coal and the joint venture partner. The purchase price for the transaction is a capital contribution by the joint venture partner of $17m.
The transaction is a “related party transaction” for the purposes of Multilateral Instrument 61-101-Protection of Minority Share Holders in Special Transactions (MI 61-101) as the joint venture partner is a wholly owned subsidiary of Blue Pacific Assets Corp., a principal shareholder of Pacific Coal.
Pacific Coal said it intends to rely on an exemption from the requirement to obtain a formal valuation but will be seeking minority shareholder approval as prescribed by MI 61-101 on this transaction. Pacific Coal has filed a notice of meeting for a special meeting of shareholders to be held on Aug. 12 in Toronto. The transaction is subject to TSXV approval and is expected to close in the third quarter of 2013.
Pacific Coal is a Canada-based mining company engaged in the acquisition, exploration and production of coal and coal-related assets from properties located in Colombia. The company’s common shares are listed on the TSX Venture Exchange. Colombia is a major exporter of coal into the U.S. Atlantic and Gulf coast markets.