Geo Energy buys stakes in Indonesian coal-linked companies for US$154 million
INDONESIAN coal producer Geo Energy Resources plans to spend just over US$154 million to acquire stakes in two companies – Indonesia-listed coal miner Golden Eagle Energy and coal infrastructure developer Marga Bara Jaya.
A 58.7 per cent stake in Golden Eagle Energy and a 33 per cent stake in Marga Bara Jaya are being acquired from Indonesian conglomerate Rajawali Group for aggregate considerations of US$154.1 million and US$49,000 respectively, Geo Energy said in a filing on Wednesday (Jul 26).
Upon completion of the Golden Eagle Energy acquisition, Geo Energy will have to make an offer for the rest of the former’s shares. It will acquire up to 75 per cent of Golden Eagle Energy.
The remaining 25 per cent will be purchased by an unrelated entity called Golden Prima Energy. This split was discussed and agreed upon by the purchasers and Rajawali Group during the initial investment stage.
Should Geo Energy take its stake in Golden Eagle Energy to 75 per cent, the cost of the two transactions will rise to US$200 million.
Geo Energy also has an option to raise its stake in Marga Bara Jaya by another 25.7 per cent. The cost of the additional stake will be US$38,550.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Geo Energy’s basic earnings per share (EPS) figure in Singapore dollar terms, assuming the transaction was completed on Jan 1, 2022, would rise to S$0.1637 following the completion of just the two transactions, from S$0.1548.
The acquisitions and the offer for Golden Eagle Energy would take the group’s EPS to S$0.1693. These, together with the additional stake in Marga Bara Jaya, will also take the group’s EPS to S$0.1693.
In its filing, Geo Energy said Golden Eagle Energy produces high-quality coal of favourable low sulphur and low ash content through its subsidiary.
SEE ALSO
Such coal enjoys strong demand and commands a premium, the company said.
Marga Bara Jaya, meanwhile, is looking to build a network to transport coal for Golden Eagle Energy and neighbouring mines in the south Sumatra area. It has already obtained the licences and land required to develop the infrastructure.
Its planned road and jetty have a targeted capacity of up to 50 million tonnes per year, with 25 million tonnes reserved for coal per annum from Golden Eagle Energy.
These transactions require shareholder approval at an extraordinary general meeting to be convened.
Geo Energy’s executive chairman and chief executive Charles Antonny Melati said the acquisition would allow Geo Energy to ramp up its coal production to 25 million tonnes per annum with “lower costs and greater operational efficiency”.
Copyright SPH Media. All rights reserved.
