Major shareholder reviewing interest following offers from several parties
By LYNETTE KHOO 6 December 2008
A major shareholder of Straits Asia Resources (SAR) is making a strategic review of its 47 per cent stake in the listed company.
SAR said yesterday that it was informed by Straits Resources Ltd that the move was prompted by unsolicited approaches from several parties on the possibility of acquiring the stake.
‘Straits Resources has also noted the sustained period during which the value of its interest in Straits Asia and its other assets have not been appropriately reflected in the market capitalisation of Straits Resources on the Australian Securities Exchange,’ SAR added in its filing with the Singapore Exchange.
SAR, which owns two coal mines in Indonesia, has a market capitalisation of $863.34 million, while Straits Resources, which mines copper, coal and gold, has a market value of A$209.61 million.
Weighed by the slump in commodity prices in the second half of this year and the market turbulence, shares of SAR are trading at a two-year low and while those of Straits Resources are at a five-year low.
SAR said that, given the size and strategic nature of Straits Resources’ stake, both companies have agreed that SAR be fully engaged in the strategic review to better serve the interest of all SAR shareholders.
Macquarie Capital Advisers and Standard Chartered Bank have been appointed to advise SAR. But SAR added that there was no assurance that the completion of the strategic review would result in a specific transaction or proposal.
Straits Resources had earlier aborted a restructuring plan due to poor market conditions. The plan was to separate its coal assets from its base and precious metals assets, as well as to have SAR hold the coal assets and be listed on the Australian stock exchange.
Last month, SAR secured a US$300 million loan from Standard Chartered Bank to refinance a US$230 million bridging facility and provide funds for capital expansion. As part of the deal, SAR is issuing to the bank 35 million warrants with an exercise price of $1.095.
It said yesterday that its financial position remains sound following this refinancing of debt facilities.
‘Further, the company’s coal producing operations are performing to plan and the company continues to benefit from its coal offtake agreements which are generally set at favourable prices with premium customers,’ SAR added.
In a note yesterday, DBS Vickers said that the possible divestment of SAR by Straits Resources is positive for SAR minority shareholders as this would help elevate SAR’s share price to its full potential value.
The brokerage hence maintains a ‘buy’ on SAR with a target price of $1.
In the stock market yesterday, SAR shares closed 7.5 per cent or 5.5 cents higher at 79 cents.
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Key Stake in Straits Asia May Change Hands
Major shareholder reviewing interest following offers from several parties
By LYNETTE KHOO
6 December 2008
A major shareholder of Straits Asia Resources (SAR) is making a strategic review of its 47 per cent stake in the listed company.
SAR said yesterday that it was informed by Straits Resources Ltd that the move was prompted by unsolicited approaches from several parties on the possibility of acquiring the stake.
‘Straits Resources has also noted the sustained period during which the value of its interest in Straits Asia and its other assets have not been appropriately reflected in the market capitalisation of Straits Resources on the Australian Securities Exchange,’ SAR added in its filing with the Singapore Exchange.
SAR, which owns two coal mines in Indonesia, has a market capitalisation of $863.34 million, while Straits Resources, which mines copper, coal and gold, has a market value of A$209.61 million.
Weighed by the slump in commodity prices in the second half of this year and the market turbulence, shares of SAR are trading at a two-year low and while those of Straits Resources are at a five-year low.
SAR said that, given the size and strategic nature of Straits Resources’ stake, both companies have agreed that SAR be fully engaged in the strategic review to better serve the interest of all SAR shareholders.
Macquarie Capital Advisers and Standard Chartered Bank have been appointed to advise SAR. But SAR added that there was no assurance that the completion of the strategic review would result in a specific transaction or proposal.
Straits Resources had earlier aborted a restructuring plan due to poor market conditions. The plan was to separate its coal assets from its base and precious metals assets, as well as to have SAR hold the coal assets and be listed on the Australian stock exchange.
Last month, SAR secured a US$300 million loan from Standard Chartered Bank to refinance a US$230 million bridging facility and provide funds for capital expansion. As part of the deal, SAR is issuing to the bank 35 million warrants with an exercise price of $1.095.
It said yesterday that its financial position remains sound following this refinancing of debt facilities.
‘Further, the company’s coal producing operations are performing to plan and the company continues to benefit from its coal offtake agreements which are generally set at favourable prices with premium customers,’ SAR added.
In a note yesterday, DBS Vickers said that the possible divestment of SAR by Straits Resources is positive for SAR minority shareholders as this would help elevate SAR’s share price to its full potential value.
The brokerage hence maintains a ‘buy’ on SAR with a target price of $1.
In the stock market yesterday, SAR shares closed 7.5 per cent or 5.5 cents higher at 79 cents.
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