Overall the mood of the meeting was very tense as analysts grill management about the deal. We remain unconvinced of the merit of this deal as there is still too many answered questions especially with regards to the financials and plans to Berau (which Delta cannot answer)
Key takeaways:
* As is widely known, the deal is essentially a share swap deal, but it has to go through the Mandatory Exchangeable Bonds (MEB) and rights issue because of regulatory limitations and to avoid a General Offer.
* The mechanism of the deal is such that they will need to do the rights issue to pay for the MEB which will be exchangeable to Berau share post the IPO. This essentially committed minority shareholders to purchasing an asset an UNDETERMINED price. Delta would like to end up with at least 51% stake (60-80% is their aim). but this is subject to pricing of the IPO.
* the deal is still in early stages and many aspects of great importance to minority shareholders are still being hammered out.
1. What will happen if the Berau IPO failed or Delta end of with a larger portion than initially intended? What would happen to the capital raised through the rights issue? Will Delta be relegated to simply bondholders of MEB albeit according to the company interest rate on bonds will be substatial to compensate for the risks.
2. Should there be a change in majority shareholders in Delta (a possibility since North Star now owns majority - 40%) are unlikely to fully subscribe to rights issue, this could trigger a General Offer. Who will be the standby buyer?
3. The purpose of this deal partly is to gain more contracts for BUMA from Berau. However, BUMA already accounts for 77% of Berau's volume and given that it is risky to rely on just 1 contractor, thus purchasing Berau will not increase volumes significantly for BUMA. Furthermore, given the new mining law that stipulates coal mining companies to use independent contractor, this deal seems to be in direct opposite to the spirit of the new mining law.
* As this transaction is material deal for Delta, they will need to obtain 2/3 of shareholders' approval. This means that it will need an additional support of 27% (from minority) in addition to the 40% from Northstar. Therefore in the next month Delta will be speaking to investors to try to convince them that the deal is value accretive (hopefully by then more information will be available).
* Management is open to have conference calls with interested clients. If you have clients holding this stock or interested in this stock, we can help arrange a conference call with them.
Tidak ada komentar:
Posting Komentar