Straits Resources says it expects to deliver shareholders around $94 million of the $US335 million ($A470 million) deal with Thailand's PTT International Company, which achieved financial close today.
Straits Resources says it expects to deliver shareholders around $94 million of the $US335 million ($A470 million) deal with Thailand's PTT International Company, which achieved financial close today.
Last month, Straits agreed to sell PTT a 60 per cent stake in subsidiary Straits Bulk & Industrial (SBI), which is also the holding company for Straits' 47.1 per cent holding in Straits Asia Resources.
Straits has been reviewing is Straits Asia shareholding since it received unsolicited expressions late last year.
Straits today said it had received the upfront cash payment of $US220 million from PTT, which had been used to repay a $A45 million debt facility provided by ANZ and Macquarie Bank.
The remaining $US115 million is expected later this year.
Straits said the PTT deal will facilitate a potential re-rating of its share price as a result of unlocking the value disconnect between the market capitalisation and the implied value of its stake in Straits Asia.
Straits also expect to return around one-fifth - $US67 million ($A94 million) - of the total PTT consideration to shareholders.
Additionally, Straits executive director Martin Purvis has stepped down from the board to take up a chief executive role with SBI.
The announcement is below:
Straits Resources Limited (ASX: SRL) is pleased to announce financial close of its strategic co-investment alliance with the PTT Group of Companies (PTT) via the sale of a 60% interest in SRL s wholly owned subsidiary, Straits Bulk Industrial (SBI), for up to US$335 million as announced to the market on 23 March 2009 (Transaction).
An official signing ceremony, attended by SRL and PTT executives and also Australian and Thai diplomats, was held in Singapore today to provide formal recognition to this important milestone in establishing a coal co-investment alliance. The Chief Executive Officer of SRL, Milan Jerkovic, stated SBI has brought together two partners, SRL and PTT, with a demonstrable commitment to the global coal sector. Together with PTT, we look forward to growing SBI into a dynamic coal platform and maximising value for our remaining 40% interest in SBI.
The strategic co-investment alliance between SRL and PTT will deliver the following benefits:
- Achieves SRL s vision to establish a global coal vehicle with the financial capability to actively pursue opportunities in the thermal coal sector;
- Introduces a motivated and financially capable major shareholder to support Straits Asia Resources Limited s (SGX: SAR) future growth and development;
- Realises significant value for a portion of SRL s coal assets whilst providing SRL with continuing economic interest and management influence;
- Reweights SRL s portfolio across bulk commodities, precious metals, base metals and other investments, diversifying SRL s exposure to commodity price, country and approval risks;
- Strengthens SRL s financial position to pursue strategic acquisitions in the resources sector at a low point in the cycle;
- Provides the opportunity for a return of capital to SRL shareholders;
- and Facilitates a potential re-rating of the SRL share price as a result of unlocking the value disconnect between SRL s market capitalisation and the implied value of the 47.1% stake in SAR.
SRL has received the upfront cash completion payment of US$220 million from PTT. The remaining performance payment of up to US$115 million relates to certain matters in connection with reserve upgrades in relation to the mine located on Sebuku Island, South Kalimantan, Indonesia controlled and operated by SAR or as otherwise agreed between PTT and SRL. The performance payment is expected to be realised during 2009.
Following receipt of the US$220 million cash proceeds, SRL has repaid the A$45 million Debt Facility provided by ANZ and Macquarie Bank Limited in full. The Board of SRL is currently reviewing the funding requirements of SRL going forward, and will provide an update to the market on finalisation of the strategy. As previously foreshadowed, SRL expects to return approximately one fifth of the total consideration received by SRL from the Transaction to Shareholders.
In conjunction with the Transaction, Martin Purvis has been appointed as Chief Executive Officer of SBI and has stepped down as a director of SRL.
Macquarie Capital Advisers Limited is acting as financial adviser to SRL in connection with the Transaction.
