LONDON – Asia Coal Energy Ventures, the vehicle backed by hedge fund Argyle Street Management Ltd and Indonesia-based Sinarmas Group, Thursday finally confirmed a GBP98.8 million takeover offer for Asia Resource Minerals, and it also secured a deal with Austria’s Raiffeisen Bank that puts it in a strong position as it battles for control of the company with founder Nat Rothschild.
Asia Coal Energy said it is offering 41.0 pence a share for the shares in Asia Resource Minerals it doesn’t currently own, a 173.3% premium to the closing price on April 13, the day before it said it would make a bid, and a 198.0% premium to the 30-day volume weighted average price leading up to that date.
If it wins the takeover battle, Asia Coal Energy said it would also underwrite a pre-emptive capital raising by Asia Resource Minerals of USD150 million at a price of at least 28.0 pence a share. It would use the money raise to pay off Asia Resource’s debt and fund operations.
The offer “provides a full cash alternative at a significant and firm premium for all equity holders, with an intention to inject more equity finance and provide a genuine operational platform for the coal asset in Indonesia to seek to generate returns for all stakeholders. The offer provides a long term future for the Berau coal assets crucially including support by Sinarmas, a substantial Indonesian conglomerate with existing coal operations as well as a growing energy generation business within Indonesia,” Asia Coal Energy said in a statement.
The offer means Asia Coal Energy is now firmly pitched into a battle with Nat Rothschild over the future of the Asia Resource Minerals, which was spun out of Bumi PLC when the parties that controlled that company fell out and battled for control.
Rothschild’s NR Holdings Ltd and SUEK, the holding company for Russian coal producer OJSC Siberian Coal Energy Co, had said they were considering a possible cash offer to acquire Asia Resource Minerals, conditional on shareholders voting in favour of a recapitalisation backed by Rothschild.
Rothschild offered to underwrite a USD94 million equity fundraising as part of a broader refinancing that would also involve the restructuring of Asia Resource Minerals’ debt. NR Holdings had said it believes that the refinancing was the only option available that would “preserve value for ARMS shareholders in the short to medium term.”
Asia Resource Minerals said it got valid acceptances for 37.9 million shares under the open offer when it closed last month, or 14.0% of the shares on offer. The shares not taken up will be taken up by NR Holdings, and 271.0 million new shares are still set to be admitted for trading, representing 52.9% of the company’s enlarged share capital, and raising net proceeds of GBP62.8 million. The offer was priced at 25 pence a share.
However, the open offer is conditional on being approved by the company’s shareholders at a meeting on May 14.
“The possible NR Holdings/SUEK offer is a last minute reactive attempt to revive NR Holdings’ opportunistic plan to take control of ARMS through the open offer. No firm offer has yet been made to ARMS shareholders by NR Holdings/SUEK, no clarity on the proposed offer price has been provided and, if an offer were made without a supportive Indonesian partner, it would not address the key issue of local partnership which ACE considers to be essential to a successful outcome for all ARMS stakeholders including bondholders, employees and the wider local economy,” Argyle Street Management Partner Kin Chan said in the Asia Coal Energy statement Thursday.
“Shareholders should therefore reject the NR Holdings underwritten Open Offer in the General Meeting on 14 May,” he added.
NR Holdings had previously hit out at the potential offer from Asia Coal Energy Ventures, saying it provides neither the company nor its shareholders with any certainty
“NR Suek has 53 days in which to table a counter offer, something that it fully intends to do,” a NR Holdings spokesman told Alliance News Thursday.
A key element at play in the battle for the company is that over 23.8% of the voting rights in Asia Resource Minerals were transferred to Austria-based Raiffeisen Bank from Samin Tan in October 2014. Tan, an Indonesian investor who used to be the chairman of Asia Resource Minerals, is still able to control indirectly a further 23.8% stake.
Argyle Street Management already has a 4.65% stake in Asia Resource Minerals and Asia Coal Energy Ventures said Thursday it has also received an irrevocable undertaking to accept the offer from Ravenwood, the vehicle holding the 23.81% stake that’s now controlled by Raiffeisen Bank.
Asia Coal said it had come to a deal with Raiffeisen Bank to buy the loans the bank is owed by Tan companies for USD120 million minus the money that will be raised by selling the 23.81% stake. If the takeover offer fails, it will still have to pay USD35 million to the Austrian bank.
Asia Coal Energy can also rely on the other 23.81% stake still controlled by Tan, as he’s been deemed a concert party under takeover rules.
Asia Resource Minerals, which used to be known as Bumi, was co-founded by Rothschild and the Bakrie family of Indonesia. The Bakrie family made an exit from the company in 2014, when it sold its 23.8% interest to Tan after a long battle over control of Bumi. – LSE.co.uk