ARMS delays general meeting as it evaluates ACE bid

By Romel S. Gurky

LSE-listed mining company Asia Resource Minerals plc (ARMS) said that it is currently evaluating a bid from Asia Coal Energy Ventures Ltd (ACE), which is backed up by Indonesia?s well-diversified Sinar Mas Group.

ARMS said in a statement Monday that as it is currently evaluating the ACE cash offer, and due to recent developments and uncertainties, the company intends to postpone a May 14 general meeting for an ?indefinite period.?

ACE made a 41 pence a share offer for ARMS earlier this month ? valuing it at close to 100 million GBP.

The bidder, which also has the support of fund manager Argyle Street Management Limited (ASML), plans to implement a US$150 million equity injection into ARMS, which owns almost 85 percent stake in IDX-listed coal miner PT Berau Coal Energy Tbk.

ARMS key shareholder Nat Rothschild, teaming up with SUEK Plc, however has pledged to make a counter offer.

?Further to the announcement on 7 May of a firm cash offer to acquire the entire issued and to be issued ordinary share capital of the company not already owned by Asia Coal Energy Ventures Limited (ACE) and funds managed by Argyle Street Management Limited, the board of Asia Resource Minerals plc (ARMS) is engaging with ACE and evaluating the ACE cash fffer in the context of a number of prevailing uncertainties,? ARMS said in the statement.

It said that the uncertainties include the following:
- A special purpose vehicle jointly owned and controlled by NR Holdings Limited (NRH) and SUEK PLC (SUEK) announced on April 20, 2015 that it is considering a possible cash offer to acquire the company. Under Rule 2.6 of the Takeover Code, NRH and SUEK have until 5.00 p.m. on the 53rd day after the publication of the initial offer document relating to the ACE Cash Offer to announce a firm intention to make an offer or announce that they do not intend to make an offer;
- The ACE cash offer is conditional and there is uncertainty as to whether the conditions to the ACE cash offer will be capable of being satisfied. The board of ARMS notes in particular that the ACE cash offer is conditional upon, amongst other things, the passing of a resolution by a simple majority of Iindependent shareholders, as determined by the Takeover Panel, of ARMS to approve the RBI Loans Acquisition and the RBI Loans Acquisition Agreement (both terms as defined in the announcement of the ACE Cash Offer) in accordance with the Code, which will also require an independent financial adviser to ARMS publicly to state that, in its opinion, the terms of the RBI Loans Acquisition are fair and reasonable. The company and its independent financial adviser have not received the information required in order for the independent financial adviser to form its opinion, and accordingly the Company is not in a position to assess whether this condition to the ACE Cash Offer can be satisfied; and
- The company's evaluation of the ACE Cash Offer is made challenging by the fact that the company's fundamental value is linked to uncertain and currently depressed coal prices.

The Group is facing a requirement to make a principal repayment of US$450 million in July 2015 of the 2015 Notes and as a consequence of the current weak coal market currently does not have sufficient cash resources to do so. The Board has stated its aim to deliver a long-term sustainable capital structure for the Group and believes that this objective is achieved by the recapitalization under which NRH has committed to underwrite US$100 million of new equity.

?However, in the context of recent developments and the above uncertainties, at the general meeting of the company convened for May 14, 2015 in connection with the proposed recapitalization of the ARMS Group?, the company intends to adjourn again that meeting for an indefinite period,? ARMS said.

It added that notice of any new date for the adjourned general meeting will be sent to company shareholders at least seven clear days before the new date of the adjourned general meeting in accordance with the company's articles of association. Unless NRH otherwise agrees, under NRH's subscription agreement such general meeting must occur by May 31, 2015.

Editing by Reiner Simanjuntak