By Kenneth Lim
United Fiber System's reverse takeover deal will now involve a larger slice of a Sinar Mas Group coal mine, enlarging the value of the deal by almost half.
Singapore-listed UniFiber said that it now plans to acquire an additional 30 per cent share in PT Golden Energy Mines (Gems) from GMR Coal Resources Pte Ltd in exchange for a 29.2 per cent stake in UniFiber.
That would raise the acquisition value for the bigger slice by $693.9 million to $2.24 billion.
UniFiber had initially agreed to buy from PT Dian Swastatika Sentosa Tbk (DSS) a near 67 per cent holding in Gems by issuing new shares that would give DSS a 92.8 per cent stake in UniFiber.
Under the enlarged deal, DSS will now have a 65.2 per cent stake in UniFiber upon completion.
The consideration shares that UniFiber will issue will be priced at 70 cents apiece after a proposed 20-into-1 share consolidation by UniFiber.
Unifiber said that the new major shareholders would seek to maintain the company's listed status.
UniFiber's common stock slipped 1.9 per cent or 0.1 of a cent to close at 5.3 cents on Monday.
Gems, a Jakarta-listed coal miner with three key projects, saw its share price decline by 1.9 per cent or 50 rupiah to 2,575 rupiah on Monday.
The deal would represent the end of UniFiber's days as a forestry and pulp company, and give shareholders an exposure to the brand of Sinar Mas, one of the largest conglomerates in Indonesia.
But observers note that coal has been going through a soft patch of late.
Global coal prices have come off sharply this year, with the current price of Indonesian coal at about US$97, about 25 per cent below the peak of about US$127 in early 2011.
A number of factors have been cited for the weakness.
China, one of the world's largest consumers of coal, has been hitting commodity prices with its slowing growth, while global supplies of coal and natural gas, a coal substitute, have been robust.
"Natural gas in the northern hemisphere is abundant, which is depressing prices a bit," one analyst said.
In Singapore, Sakari Resources is the only other major listed Indonesian coal mining play.
Sakari, which reported a 65 per cent drop in first-quarter net earnings for the period ended March, saw its shares gain 5.9 per cent or eight cents to close at $1.445 on Monday.
The Sakari counter has come off about 20 per cent since the start of the year and is trading at 8.1 times trailing 12-month earnings.
The broader Straits Times Index, in comparison, has gained about 10 per cent year-to-date and is valued at a price-earnings ratio of 9.6 times, according to Bloomberg.
This article was first published in The Business Times.