Mandiri Sekuritas Delta Dunia Makmur: has signed non-binding agreement with Recapital for the acquisition of Berau Coal (DOID, Rp1,180, not rated)

􀂄 In a press release yesterday, DOID signed a non-binding term sheet with Recapital Investment for DOID to acquire a majority interest in Berau Coal.

The proposed transaction will be conducted as follows:
a.) DOID to subscribe to a Mandatory Exchangeable Bond (MEB) issued by an affiliate of Recapital (exchangeable in shares of Berau at the the value achieved by Berau Energy in a qualified international IPO, expected in April 2011).

b.) To finance the MEB, DOID will conduct a rights issue for some Rp10tn (US$1.1bn) at a price of Rp1,400/share. Under the term sheet, Recapital will acquire a substantial interest in DOID, and will act as standby buyer for the entire rights
issue

c.) Recapital, (currently owning 100% of Berau) will swap a majority of its Berau shares to DOID in exchange for a substantial shareholding in DOID.

􀂄 We do not have a rating on the stock, which currently trades at PER10F 8.1x, based on consensus estimates.