Second time lucky for Golden Energy's takeover bid for Stanmore Coal
Singapore
COAL producer Golden Energy and Resources (Gear) has snagged a controlling stake in Stanmore Coal, a day after announcing a fresh takeover bid for the Australian firm.
Mainboard-listed Gear on Thursday made on-market purchases of 50.3 million Stanmore Coal shares at A$1 (S$0.86) apiece in cash from a range of institutional and other shareholders, it said on Friday.
These shares represent a 19.7 per cent stake in Stanmore Coal, and their acquisition bumped Gear's stake up to 51 per cent. This makes Stanmore Coal a subsidiary of Gear.
Mark Zhou, head of investments at Gear, said: "It is pleasing that the merits of our offer were so quickly endorsed by numerous fellow Stanmore shareholders."
The bid vehicle for the takeover is Golden Investments (Australia), a joint venture between Gear and Ascend Global Investment Fund.
The offer will be financed with cash to be provided by Gear and Ascend Global.
Gear will provide the funding to acquire the first 60 per cent of Stanmore Coal shares, while Ascend Global will only subscribe for shares in Golden Investments once the bid vehicle's stake in Stanmore Coal reaches 60 per cent.
Gear will drw on its cash reserves to subscribe for shares in Golden Investments totalling up to A$78.4 million, while Ascend Global has proposed to fund its maximum commitment of A$107.5 million in part with undrawn capital commitments of US$75 million from investors in one of its sub funds.
As at Dec 31, 2019, the unaudited net asset value and the net tangible assets of the on-market purchase shares are about A$31.9 million and A$17.5 million, respectively.
The market value of the shares is A$40.5 million, calculated based on the volume-weighted average price of A$0.8054 per Stanmore Coal share for all trades done on April 1, 2020.
Separately, Mr Zhou noted in a statement on Friday that Gear has been driving its sustainable expansion, at a compound annual growth rate of 37 per cent over the past decade, from 1.8 million tonnes in 2010 to 30.8 million tonnes in 2019.
"Golden Investments, being a strategic sustainable coal producer and operator, recognises the potential of Stanmore's assets, as well as the ongoing positive contribution and efforts of its workforce," he said.
Assuming that the buyout offer had closed and the relevant transactions had been completed on Dec 31, 2019, Gear's pro-forma net tangible asset per share would fall to 6.68 US cents from 8.49 US cents. Earnings per share, however, would increase to 2.063 US cents from 0.423 US cent, according to pro forma estimates provided by Gear.
Quiddity Advisors analyst David Blennerhassett told The Business Times on Friday: "This is game over - Golden Investments has clinched 51 per cent. They have control. The question now is whether they can get to 90 per cent and compulsorily squeeze out the minorities."
Shares in Gear closed at 17 Singapore cents on Friday, down 1.3 cents or 7.1 per cent.
