Wednesday, May 19, 2010

United Fiber System

United Fiber System announced plans to acquire PT Kutai Chipmill for US$65m. Kutai is principally engaged in producing & exporting woodchip as raw material for pulp in Balikpapan, East Kalimantan with designed capacity of 700k tpa. To help fund the acquisition, UFS will issue 3.56bn shares, representing 53% of its enlarged share cap for S$178m to Falcon Capital Global, of which US$65m will be used for the planned acquisition, US$20m for expansion of its woodchip biz the rest for working capital

Falcon will be seeking a waiver from the SIC from having to make a GO. UFS has had a poor history of executing its projects and we are not overly excited on this latest development.

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