Golden Energy and Resources falls short in joint bid for Stanmore Coal; will seek board seats

SINGAPORE - Mainboard-listed Golden Energy and Resources' (Gear) joint attempt to take over Australian coal producer Stanmore Coal ended without a majority position at the close of the buy-out offer on Tuesday (Jan 22).

Still, the exercise has left bid vehicle Golden Investments (Australia) - a joint venture between mainboard-listed Gear and Ascend Global Investment Fund - with a 25.5 per cent stake in Stanmore, up from the 19.9 per cent bought from Hong Kong's Greatgroup Investments in November 2018.

Golden Investments went on to launch a takeover offer at A$0.95 a share - which valued Stanmore at about A$240.2 million (S$232.9 million) - in what it presented as giving a fair shake to minority shareholders to exit at the same price as Greatgroup.

Speaking by phone from Australia, Golden Investments director Mark Zhou, who is also head of investments at Gear, told The Business Times on Wednesday morning that he views the outcome as "very good" and added: "We've managed to increase our interest and gained negative control of the company." The upped stake lets his firm block both friendly mergers and hostile takeovers, he noted.

He said that Golden Investments, having firmed up its position as Stanmore's biggest single shareholder, will not go out to change the direction of the Australia-listed coker. Golden Investments had previously indicated in bid materials that it does not plan to make major changes to the business or redeploy any assets.

Instead, Mr Zhou has characterised the deal as a strategic investment for Gear, which will grow its product mix and geographic footprint beyond Indonesian thermal coal.

Golden Investments - which has now declared itself "a committed, long-term shareholder" in Stanmore - is 51 per cent owned by Gear and 49 per cent owned by Ascend Global, a fund managed by Halim Susanto's Singapore-based Ascend Capital Advisers.

Mr Zhou has said that his firm will seek an "appropriate" number of board seats - possibly more than Greatgroup's one. But, as for how many, he said: "We haven't gone into negotiations because the offer has just completed. We will be in discussions on what the appropriate number would be."

The public back-and-forth between Golden Investments and Stanmore saw rhetoric heat up at times, such as Stanmore chairman Stewart Butel's description of the takeover bid as "unsolicited and inadequate". For its part, Golden Investments said that the Stanmore board's plans for an interim payout and share buyback were "so short-term in nature that they may be indicative of limited confidence in the potential level of ordinary equity market support for the Stanmore Coal share price".

But all that is water under the bridge now, according to Mr Zhou. "With the takeover all done, the key thing is to focus on the expectations for the company," he said. "Relations are pretty much cordial."

When asked whether Golden Investments will try to fight the proposed share buyback scheme, he told BT that such a programme's reduction of outstanding shares might in fact benefit his firm, as regulations do not allow it to make another offer for six months.

"The share buyback could be a positive thing for effective shareholding," he noted.

"Stanmore lacked a strategic shareholder that was already in the same business, that could be a cornerstone," Mr Zhou added. "I see ourselves as that piece of the puzzle."