Noble, Indika eye stake in Straits Asia Resources

Kalimantan Coal

By Michael Flaherty and Fayen Wong
HONG KONG/PERTH, Jan 30 (Reuters) – Commodities firm Noble Group (NOBG.SI) and Indonesian coal miner PT Indika Energy Tbk (INDY.JK) are among the companies pursuing a bid for Straits Asia Resources (STRL.SI), according to sources familiar with the matter, in a deal that could be worth more than $800 million.
Bidders are setting their sights on the two Indonesian coal mines that the Singapore-listed company controls. Its stock rose 10 percent to S$0.91 on Friday after Reuters first reported the interest of Noble and Indika.
Australian miner Straits Resources Ltd (SRL.AX), which owns 47.1 percent of the company, said last December it was reviewing what to do with the stake after receiving approaches from buyers.
Bids for the stake are due at the end of this month, said the sources, who declined to be identified because they were not authorised to speak publicly about the deal.
If a suitor goes for the entire 47.1 percent stake it will have to make a bid for the whole company under Singapore rules.
The market capitalisation of Straits Asia Resources is S$900 million ($597.2 million). A more than 25 percent premium for the company could make the deal worth more than S$1.1 billion ($800 million).
Analysts said Noble has the capacity to make an acquisition given its strong cash position.
“Noble at the end of September had $1.1 billion of cash,” said Lee Wen Ching, an analyst who covers the company at OCBC Investment Research. “There are quite a few distressed assets in the market and there are long-term investment opportunities.”
Lee said while Noble remained in good shape to ride through the current turbulence it was not immune to dwindling global trade and demand. Shares of Australia’s Straits Resources, like its peers, were hit hard by the commodity cycle downturn. Its stock plummetted from A$8 per share last March to under A$1 by December. Shares of Straits Asia Resources went from S$4 last June to below S$1 by year-end.
With both stocks under heavy pressure, buyers see an opportunity to purchase promising coal assets for bargain prices.
Some bidders could also go a below 30-percent stake in the firm so they do not have to buy the entire company, one source close to the matter said.
Straits Asia Resources was not immediately available for comment.
Standard Chartered (STAN.L) and Macquarie (MQG.AX), the two banks handing the process, were also not immediately available for comment.
Straits Asia Resources has two thermal coal operations in the coal-rich region of South Kalimantan, Indonesia. The mines are expected to produce about 9 million tonnes of coal in 2008 and the firm has targetted to more than double production to 19 million tonnes in the next two to three years

(Editing by Jonathan Hopfner)

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