Indonesian copper consortium Eastern Field Developments, formed last September in preparation for a hostile takeover of Finders Resources, has decided to make its bid unconditional, citing lack of interest from potential “white knight” suitors.
Eastern Field, which is jointly owned by three large Indonesian companies, Provident, Saratoga and Merdeka, first announced its plans to acquire Finders last October when it valued Finders at around $178 million, proposing a price of 23 cents a share. Eastern Field cited Finders’ inadequate performance at its 25,000 tonne a year (t/y) Wetar copper project as the primary reason for its intention to sell.
Finders rejected the offer at the time, saying it was too low and lacked value — Deloitte estimated a more appropriate value of 31–35 cents per share in an independent report, for example.
Now, Eastern Field has made its offer unconditional, citing a lack of interest from potential buyers, as well as Finders’ five-day share price hitting 22.14 cents per share.
The consortium hopes that it can eventually recover share value over time by purchasing the shares. Eastern Field has also been critical of what it called Finders “unwillingness” to produce a first quarter 2018 production forecast following a 41 per cent capacity shortfall in the fourth quarter 2017 (4100t out of a 7000t nameplate capacity).
Eastern Field director David Fowler commented on this, stating that the time had come to “draw a line in the sand”.
“We announced our intention to take over Finders Resources five months ago. Finders has had ample time to secure a white knight but the reality is that no alternate bidders have emerged,” he said.
Finders managing director Barry Cahill commented on the takeover bid in an advertorial for the Australian Financial Review this month, stating that only five per cent of shareholders had actually taken up the offer so far.
“We have a fundamental strategy about building the project, paying down the debt, drilling the other deposits and prospects we’ve got, extending mine life, building other projects and returning money to shareholders,” he said.
The paper also noted that the Wetar project had increased its EBITDA (earnings before interest, taxes, depreciation and amortisation) from $US10.9 million ($13.8 million) in fourth quarter 2016 to $US72 million ($90.6 million) in the 2017 calendar year. In addition, Finders debts were more than halved in the same timeframe.
“We have more than halved our project’s bank debt and the debt facility runs until March 2019”, explained Cahill. “Finders hopes to pay out the facility by the end of 2018, assuming the copper price remains strong and production proceeds as planned.”