Stanmore Coal’s board has labelled a $240 million takeover bid from Golden Investments as “inadequate”.
Golden Investments, which is majority owned by Indonesian mining company Golden Energy and Resources, last week offered 95 cents per share for Stanmore, representing a 6.4 per cent premium on the company’s five-day weighted average price before the offer was made.
Stanmore’s statements oppose those of Golden Investments, which believed the offer to be “attractive” in its bidders statement.
The Stanmore Coal board responded to the bid yesterday, taking a “very strong view” that shareholders should reject the offer.
It argued that Golden Investments’ offer significantly undervalued Stanmore’s shares, claiming that its $225 enterprise valuation of Stanmore was only 1.5-1.7 times greater than the company’s forecast 2019 earnings before interest, tax, depreciation and amortisation (EBITDA) of $130-150 million.
“This is materially below the trading multiples for the shares of all of the coal producing companies listed on ASX,” Stanmore Coal chair Stewart Butel said in the statement.
The board also disapproved of the offer due to its lack or recognition of the current value of Stanmore’s projects in Queensland’s Bowen Basin and Surat Basin, as well as the positive outlook for the coking coal sector.
Stanmore’s Isaac Plains complex in the Bowen Basin (which was purchased by the company from Vale for just $1 in 2015) has achieved considerable growth in the 2018 financial year due to improved coal prices and the contribution of Isaac Plains East.