Release: Purchase of Sebuku 20% minority interest - Update
Tuesday, February 8 2005 - 04:48 AM WIB
SELL DOWN OF CONSIDERATION SHARES HEAVILY OVERSUBSCRIBED 20% of Sebuku will be purchased by Straits for a consideration of A$20 million (twenty million Australian dollars) payable in fully paid ordinary shares in Straits at a price of $1.836 per share being the Volume Weighted Average Price for the 30 days prior to the announcement to the ASX of the proposed transaction.
The minority parties who are substantial share holders in Straits (including two Directors) have agreed to collectively on sell 70% of their consideration Shares and for that purpose Straits have appointed Austock Corporate Finance Limited (Austock) to manage the sales of these shares to institutional investors. This sell down has been completed and was heavily oversubscribed. The effect on the minorities collective voting power in Straits after the 70% placement of consideration shares means a reduction from 56.0% to 50.7% of total voting shares.
The Independent Experts Report undertaken by BDO Consultants concludes that the proposed transaction is fair and reasonable to Shareholders and values the 20% interest in the Sebuku Coal Project at $26.5m (range of $24m to $29m) and the SRL shares issued as consideration at $23.4m (range of $20.8m to $25.9m), based on a Straits share price valuation of $1.91 to $2.38 per share.
The transaction is seen as extremely positive for Straits shareholders for a number of reasons including
o Provides SRL with 100% ownership and cash flow from the Sebuku coal operation
o There is likely to be an uplift in the Company?s earnings per share
o The liquidity of SRL?s shares will improve
February 8, 2005 ? Documentation providing details of the transaction by Straits Resources Limited (Straits) to purchase the 20% minority interest in Sebuku (first announced to the Australian Stock Exchange (ASX) on 24th January 2005) was released on Friday 4th February. Documentation was posted to shareholders today and consists of the Notice of Meeting, Explanatory Statement and an Independent Experts Report. Shareholders are encouraged to read these documents in full.
The principal points of the proposed transaction are that;
o Provides SRL with 100% ownership and cash flow from the Sebuku coal operation
o There is likely to be an uplift in the Company?s earnings per share
o The liquidity of SRL?s shares will improve
The transaction is subject to approval by shareholders at a meeting to be held on 11th March. (end of release)