LONDON (Alliance News) - Asia Coal Energy Ventures Ltd Tuesday said it will work hard to "protect and preserve" its proposed restructuring of debt issued by two subsidiaries of Asia Resource Minerals PLC, as the vehicle aims to acquire the London-listed coal mining company.
The news comes one day after Asia Resource Minerals said the actions of its former chief executive, Amir Sambodo, have caused delays to paying some mining contractors in Indonesia, where the company indirectly owns 84.7% of PT Berau, which indirectly owns 90% of Berau Coal. Asia Resource Minerals is trying to regain control of its operations in Indonesia, where it has said that Sambodo has remained in position despite having resigned in March.
Asia Resource Minerals warned that the delays could "could conceivably result in both the suspension of mining operations by one or more of such contractors, and cause one or more of the contractors to take insolvency actions against Berau in the Indonesian courts, which may have results which are materially detrimental to the company's value".
In a statement, Asia Coal Energy said it is "aware that hostile forces" could be planning to take legal action against at least one of Asia Resource Minerals' subsidiaries in Asia, which could disrupt plans to restructure debt issued by the subsidiaries.
In an open letter, Asia Coal Energy and Sinarmas said: "We respectfully ask that all contractors and working capital providers to Berau continue to work in harmony with Berau in ensuring that the business is run in as stable and normal a way as is possible."
"We believe that any difficulties that are now being faced are temporary and that the long term future of Berau is bright for all legitimate stakeholders. We therefore encourage all stakeholders to support Berau and not take any steps that might damage the business, including any enforcement of legal claims whether by way of PKPU or otherwise," the letter continued.
The need for Asia Resource Minerals to refinance is becoming increasingly urgent as its subsidiaries must repay a USD450 million bond by July 8, as well as a further USD500 million due in March 2017, with their ability to do so compromised by pressure on thermal coal prices.
Asia Coal Energy said it and Sinarmas will "work in good faith with other supportive trade and working capital creditors of PT Berau Coal Energy Tbk and Berau Capital Resources Pte Ltd in order to defeat any such hostile actions and to preserve value for all legitimate stakeholders".
Backed by the Indonesian Widjaja family's Sinarmas Group, Asia Coal Energy had been given a boost on Monday after Asia Resource Minerals said the vehicle's plans appear to be a "better option" for the company than an underwritten open offer proposed by financier Nat Rothschild, though his proposal is still being retained as an option as Asia Resource Minerals is yet to formally recommend the offer from Asia Coal Energy.
Asia Coal Energy's proposals envisage a takeover valuing Asia Resource Minerals at 41 pence per share and a recapitalisation of USD150 million. Rothschild, whose USD100 million open offer remains on the table, withdrew his intention to make an offer alongside SUEK, the holding company for Russian coal producer OJSC Siberian Coal Energy Company, about two weeks ago as the situation with Sambodo escalated.
Asia Coal Energy's takeover offer remains conditional on a so-called fairness opinion from Asia Resource Minerals' financial adviser on a related transaction, as well as approval from independent shareholders.
The fairness opinion relates to loans set to be acquired by Asia Coal Energy for about USD85 million from Austria's Raiffeisen Bank, which controls 23.81% of the voting rights in Asia Resource Minerals. Those voting rights used to be held by Samin Tan, the ex-chairman of Asia Resource Minerals, until they were transferred to the bank in October 2014.
The loans being acquired in conjunction with the equity stake were made by Raiffeisen to companies associated with Tan.
Shares in Asia Resource Minerals have been suspended since May 22.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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