LONDON (Alliance News) - Asia Coal Ventures Ltd Monday said it has made an improved offer to takeover Asia Resource Minerals PLC which has secured the backing of significant shareholder Nathaniel Rothschild, who had claimed the previous offer undervalued the company.
Last Wednesday, financier Rothschild's NR Holdings Ltd vehicle, which holds a 17.2% stake in Asia Resource Minerals, said Asia Coal Venture's 41 pence per share offer undervalued the Indonesian coal mining company. That first offer also included a commitment from Asia Coal Ventures to underwrite a USD150 million equity injection.
On Monday, Asia Coal Ventures said it had increased the offer to 56.0 pence per share, up 37% from the original offer and valuing the company at over USD200 million. In a separate statement, Rothschild's NR Holdings confirmed the offer and said it intended to accept it.
"NR Holdings has worked tirelessly, as a significant minority shareholder, to secure an increased offer price from Asia Coal Ventures," said NR Holdings.
"There is no suggestion that this is a good outcome for shareholders, but it is the best short-term outcome given the difficulties that Asia Resource would have faced had it attempted to recover, via a lengthy and costly litigation process, the USD173 million that was mis-appropriated by the former Indonesian controlling shareholders and management of this company," added Rothschild.
Asia Coal Ventures also confirmed Rothschild and NR Holdings have conditionally agreed to accept the offer via irrevocable undertakings for its 17.2% stake in Asia Resource.
"Asia Coal Ventures and Sinarmas are delighted to have received this irrevocable undertaking from the honourable Nathaniel Rothschild and NR Holdings. We are grateful to Mr Rothschild for his good faith and professionalism in all our dealings," said Asia Coal Ventures.
A previous offer from NR Holdings to underwrite a USD100 million open offer has now been taken off the table following the increased takeover offer.
Asia Resource Minerals needs to refinance due to the need to fund debt repayments of USD450 million in bonds by July 8 and USD500 million in March 2017. Pressure on thermal coal prices has compromised the company's ability to repay its debt, while there have been distractions from Amir Sambodo, the company's former chief executive, who has taken control of Asia Resource Minerals' operations in Indonesia, where it indirectly owns 84.7% of PT Berau, which indirectly owns 90% of Berau Coal.
Asia Resource Minerals has warned that Sambodo's actions have caused payments to some mining contractors to be delayed, which could cause the contractors to take insolvency actions against Berau in the Indonesian courts.
One determinant as to whether the takeover proposal can proceed concerns arrangements between Asia Coal Energy Ventures and Austria's Raiffeisen Bank, which controls 23.81% of the voting rights in Asia Resource Minerals. The vehicle wants to buy the lender's equity stake and a package of loans it made to companies associated with the former chairman of the coal mining company.
The voting rights controlled by Raiffeisen Bank were transferred to the bank from Samin Tan, the ex-chairman of Asia Resource Minerals, in October 2014, meaning that any move to acquire the company gives the Austrian lender a key role to play.
The acquisition of Raiffeisen's equity stake in the company has been complicated by a move to buy a package of loans made by the Austrian bank to companies associated with Samin Tan, who has been deemed to be acting in concert with Asia Coal Energy Ventures, Sinarmas and Argyle Street Management.
Last month, NR Holdings and SUEK, the holding company for Russian coal producer OJSC Siberian Coal Energy Co, withdrew their intention to make a rival takeover offer for Asia Resource Minerals.
Shares in Asia Resource Minerals have been suspended at the company's own request since May 22, when the company said it was working to regain control of its operations in Indonesia from Sambodo.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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