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Golden Energy questions proposed Stanmore dividend in takeover tussle
THE bid by Golden Energy and Resources (Gear) to take over Australia's Stanmore Coal has continued hitting road blocks, with both parties releasing fifth supplementary statements on the offer on Friday.
The latest point of contention is the Stanmore board's Friday declaration of an interim dividend of three Australian cents a share, and a buyback scheme for up to 10 per cent of all ordinary shares.
Stanmore directors called these moves part of the their capital management strategy, and told shareholders in a letter on Friday: "In declaring the interim dividend, the board is confident that the strong operational performance and positive outlook for the business will continue to generate adequate funding for operations, development and growth investments."
In response, bid vehicle Golden Investments (Australia) - a joint venture between Gear and Ascend Global Investment Fund - said that it has "serious concerns" over the board's reasons for these actions.
Gear said in late 2018 that it would lead deals of up to A$249 million to buy all of Stanmore - an effort that Stanmore chairman Stewart Butel called, in letters to shareholders, "unsolicited and inadequate".
The offer of A$0.95 in cash for each Stanmore share closes on Jan 22.
Golden Investments and Stanmore had previously locked horns over this sum.
Stanmore engaged BDO Corporate Finance, which pegged its valuation at A$1.48 and A$1.90 a share and called the offer "not fair and not reasonable to shareholders", while Golden Investments first released and then retracted a lower valuation of A$0.84 to A$1.10 a share by Grant Thornton.
With the latest dividend and buyback news, Golden Investments has now said: "The proposed corporate actions (including the proposed buy-back) are so short-term in nature that they may be indicative of limited confidence in the potential level of ordinary equity market support for the Stanmore Coal share price after the removal of the price support currently being provided by the offer."
It also asked why Stanmore has announced an interim dividend before releasing its half-year results.
Stanmore's Mr Butel, meanwhile, wrote to shareholders: "The directors are confident of the outlook for your company and its capacity to create value for shareholders. This is reinforced by the strong and improving operating performance of the business and the material improvement in the board's expectations for production and earnings for FY2019."
Stanmore's latest full-year results showed a net profit of A$5.97 million for the 12 months to June 30, 2018 - down by 50 per cent on the year prior, on swelling expenses - which came even as the group posted a 51 per cent jump in revenue, to A$208.1 million.
"The outlook for Stanmore Coal and the reasons set out in the target's statement support the board's unanimous recommendation that shareholders reject the offer from Golden Investments and take no action," Mr Butel added.
According to bourse filings, Gear now has valid acceptances representing 4.46 per cent of Stanmore shares, which takes its stake in Stanmore to 24.3 per cent.
Stanmore closed flat at A$0.955 on Friday.