Geo Energy Resources Limited is now out of the bidding process for the Sakari Resources-owned Jembayan coal mine in East Kalimantan, according to three sources. Two rival buying consortia - led by prominent Indonesian families the Bakries and the Widjajas - are still in the running for the acquisition of the coal assets, according to two of the sources.
Sakari Resources is in turn owned by Thailand’s PTT Public Company Limited, according to
its 2018 annual report.
Geo Energy had previously submitted a non-binding proposal to acquire the East Kalimantan coal asset on Sept. 30,
as reported. More details on the East Kalimantan coal asset can be found in
Reorg’s tear sheet for Geo Energy.
Following the September 2017 issuance of its $300 million 8% notes due 2022, Geo Energy has been looking to deploy a large part of the proceeds of the notes towards the acquisition of coal mining assets.
Geo’s primary acquisition target had been the Jembayan Coal Mine, which has around 90 million tonnes of marketable coal reserves, as reported. With Geo out of the Jembayan’s bidding process, the company is left with its
proposed acquisition of PT Titan Global Energy (Titan Global) to deploy the proceeds from its $300 million 8% notes due 2022 issuance.
Titan Infra Sale to Geo
Geo on Sept. 23 announced its proposal to acquire a 100% stake in Titan Global and an interest of 51% in each of the two producing mines - PT Bara Anugrah Sejahtera (BAS) and PT Banjarsari Pribumi (BP) from PT Titan Infra Energy (Titan Infra) and PT Jaya Utama Indonesia. Consideration for the transaction was $25 million, as reported. BAS and BP have around 50mt and 39mt of coal reserves, respectively, as of November 2018, implying a valuation of $0.57 per reserve tonne. This is a rather low figure, according to industry sources and Reorg’s analysis of Indonesian coal miners’ trading comparables.
The sale is conditional, among others, on the consent of relevant creditors, as reported. Titan Infra is currently seeking the approval of its creditors to go forth with its sale to Geo, said two other sources.