Ann: Contract Extension - Isaac Plains East, page-21

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https://www.theaustralian.com.au/bu...r/news-story/fdcbd16a97f8da01b326d679270d7c1d
BY PAUL GERVEY  JANUARY 15, 2019
Stanmore Coal valuation divides independent experts as Golden Investments declines to raise offer

A squabble has broken out between independent experts Grant Thornton and BDO over the valuation of Stanmore Coal, bringing some life to a takeover battle that otherwise looks headed for a stalemate.

Singapore-based Golden Investments, which represents a consortium of Indonesian groups that currently own a 19.9 per cent stake in Stanmore (SMR), launched their $240 million, 95c per share bid for Stanmore last November but have struggled to gain traction to date.

Stanmore late on Monday announced increased production and profit guidance, although Golden Investments was quick to kill off any expectations that it may raise its offer when it announced Tuesday morning that its offer price was final. It also declared its offer unconditional.

The decision came after Golden Investments commissioned Grant Thornton to study the independent expert’s report prepared for Stanmore by BDO. That BDO study valued Stanmore at between $1.48 and $1.90 a share, well above the offer price from Golden Investments.

Grant Thornton’s assessment identified what Golden Investments said were “material issues” in BDO’s valuation, “including a largely unexplained and unjustified six-fold increase in the value of [Stanmore’s] Isaac Downs development project in less than six months, and an apparent failure to apply market standard best practices in the use of selective coal price forecasts”.

Golden Investments director Mark Zhou said Stanmore shareholders had a compelling offer before them.

“Our offer — and the indirect support it has been providing to the Stanmore Coal share price during the past eight weeks — will lapse in seven days, so shareholders need to act quickly,” Mr Zhou said.

The updated guidance from Stanmore showed that the company now expects to produce 2.15 million tonnes of coal this financial year, up from its earlier estimate of 2 million tonnes. It also said it expected underlying earnings before interest, taxation, depreciation and amortisation of between $140m and $155m — a level that it said would support the board’s consideration of interim and full-year dividends.

Stanmore managing director Dan Clifford said the updated guidance reflected the progress the company was making in improving its performance.

“We’re now extremely confident on 2.15 million tonnes and a resultant increase in our EBITDA, because we can see the underlying strength in the performance, our balance sheet, our no debt and the coal price,” he said.

He said that it was clear that the offer from Golden Investments was too low, regardless of the findings from Grant Thornton.

“If you just look at EBITDA multiples and our trading price, we are wildly undervalued,” he said.

“People can argue all they like from an accounting perspective but there’s some other realities in all of this as well, and our trading multiples are extremely low.”

Shares in Stanmore, which had traded as high as $1.08 in the weeks since Golden Investments launched its offer, fell 4 cents to 96c.”