Golden Energy and Resources’ 51%-owned subsidiary Golden Investments has lobbed an off-market cash takeover bid for 100% of Stanmore Coal (ASX: SMR).
Ascend Global Investment Fund owns the other 49% of Golden Investments.
The offer values Stanmore at $0.95 per share, which is a 14% premium to Stanmore’s previous closing price of $0.83.
According to Golden Investments, its offer is “attractive” to Stanmore’s shareholders, providing “immediate value”, without further exposure to the current market conditions, including “volatile energy markets” and rising trade tensions between super powers.
As part of its bid, Golden Energy and Resources has agreed to swallow up 50.1 million Stanmore shares from the company’s largest shareholders. Golden Investments will then secure the shares from Golden Energy and Resources.
Once the share reshuffle has been completed, Golden Investments will have a 19.9% stake in Stanmore.
As a sweetener to Stanmore shareholders, Golden Energy and Resources said it would bring to the table its coal mining expertise as one of Indonesia’s largest coal producers, achieving an output of 15.6 million tonnes in 2017.
Stanmore’s board has responded with “take no action” on Golden Energy and Resources’ bid and has engaged financial and legal experts to advise it on the offer.
Additionally, the company reported this morning it had forecast its underlying earnings before interest tax depreciation and amortisation could hit $150 million in the current financial year – up from $45.6 million in 2018.
During the 2018 financial year, Stanmore’s net profit was $6 million – down from $12 million in 2017.
Stanmore said the big increase in EBITDA would be underpinned by its production guidance of 2 million tonnes per annum from its flagship Isaac Plains project in Queensland’s Bowen Basin, which is producing semi-soft coking coal and thermal coal.
Open cut mining started at Isaac Pains in July this year and Stanmore is undertaking a bankable feasibility study into creating an underground operation and plans to make an investment decision before June.
Stanmore anticipates increasing its run of mine to 3.5Mtpa in the mid-term with progression to a 7Mtpa operation from multiple deposits over 20 years.
Unlike Golden Energy and Resources’ outlook, Stanmore stated it expected the coal price to remain strong in the medium-term.
Stanmore also noted its operating margins improved 14% between 2017 and 2018. The company said it expected its margins to be boosted further in 2019 underpinned by lower mining costs and a stronger outlook in the coal price.
This morning’s takeover offer pushed Stanmore’s share price up almost 17% to reach $0.97.