Blumont

Blumont: has announced that it has reached an agreement for a proposed takeover bid for a foreign-listed coal mining company for an aggregate consideration of ~$145.9m. The consideration is to be satisfied by an allotment and issue of up to ~72.2m new shares, representing 4.2% of the company’s enlarged share capital (based on issued share capital as at 4 Oct13 and ~2.7% of the Co’s enlarged share capital after its post rights issue of 1 rights share for every 2 shares), at an issue price of $2.02. Based on the audited financial statements of the target for financial year FY13, the target has incurred a total comprehensive loss of ~$7.9m. In addition, Blumont has also come to commercial agreement with the target to invest ~$97.7m in the target by way of, a subscription for ~$28.91m of new target shares by way of cash and a subscription for convertible bonds of a principal amount of ~$68.75m. To meet the target’s funding requirements, Blumont will be making a loan of up to ~$28.91m in principal amount to the target. The loan will be repayable immediately upon completion of the share subscription, or within 6 months of the resolutions for the share subscription and the bond subscription not receiving the requisite approval from shareholders. Blumont’s share price plunged ~18% yesterday, following recent scrutiny by SGX and related investor’s bodies, which challenged the stocks fundamentals and gravity-defying performance, calling for more transparency and disclosure by the company to shareholders. Given its market cap of $5.2b, The Business TImes had earlier drawn parallels between its market value and that of S'pore Press Holdings and other blue-chips. This challenges common sense as Blumont posted revenue of a mere $714,000 in 2Q13 and a net loss of $22.4m on the back of fair value write-downs on its financial assets.