Sias meets Golden Energy, asks for exit offer to be ‘raised considerably’
CITING the sentiments of Golden Energy and Resources’ (Gear) minority shareholders, Securities Investors Association (Singapore), or Sias, founder and chief executive David Gerald told Gear officials that the exit offer for the company “must be raised considerably” for progress to be made on the deal.
This was communicated during a Mar 6 meeting to Gear’s executive director Mark Zhou, along with senior management members of the company, said Sias’ chief on Thursday (Mar 9).
According to Gerald, representatives of the company reached out to Sias in response to his Feb 28 letter to Gear’s board, where he requested the company to revise its exit offer upwards.
At the meeting, Gear officials outlined the challenges the company faced in doing so – including limited financing options due to continued pressures related to environment, sustainability and governance (ESG).
They also explained conditions that must be satisfied before the proposed transactions can be tabled by Gear to its independent shareholders, to vote on the distribution-in-specie and proposed delisting, before the exit offer can go live. Such conditions include regulatory approvals in Indonesia and Singapore, as well as approvals from independent shareholders of Gear’s Indonesia-listed majority shareholder Dian Swastatika Sentosa, said Gear officials.
On the other hand, Gerald said he has made certain concerns of Gear’s shareholders clear to these officials.
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“The fact that they (Gear) have to go through their due process to seek approval on the conditions has nothing to do with the settlement of the fair and reasonable price. According to shareholders, Gear could still reconsider the price as even if the conditions are approved, shareholders still could reject the offer if the current price is the one that is still offered,” he said.
In particular, Gerald said Gear shareholders strongly maintain their view that the current exit offer price of S$0.16 per share is too low, because it significantly undervalues Gear’s stake in Australia-listed Stanmore Resources.
“The exit offer, minority shareholders feel, must be raised considerably to have any chance of convincing them to accept the offer.”
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While Gear officials highlighted a need to reserve their funds for commitments such as mergers and acquisitions, Gerald pointed out that the company had a “fantastic FY2022” with strong positive cash flow and no dividends declared.
He further reiterated that only the cash option is viable for most Singapore shareholders of Gear, referring to the all-cash consideration of S$0.846 per share which Gear shareholders can opt for under the deal announced on Nov 9, 2022.
The alternative – a scrip option for Indonesia-listed shares in Golden Energy Mines (Gems) – is “not feasible as the transaction costs are prohibitively high”, he added.
Gerald further urged Gear to manage the proposed distribution of Gems shares, and the proposed privatisation of Gear, independently of each other as two separate transactions.
“Following the meeting, Sias notes Gear’s commitment to provide all relevant information, including through Sias’ channels, for shareholders to make an informed decision,” wrote Gerald.
Sias will be organising a dialogue session between Gear’s board and senior management, and the company’s shareholders, as soon as the offering circular documents are dispatched. This would give shareholders the opportunity to pose questions to help them make an informed decision, while allowing Gear’s officials to clearly explain the reasons for their offer, said Gerald.
“Gear officials maintained that its professional advisers should be given time to follow the due legal process so that the proposed transactions can be sufficiently certain. Sias looks forward to greater openness and communication between Gear and shareholders to ensure transparency and trust.”
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