HERALD Resources' suitor PT Bumi Resources will possibly use a Credit Suisse debt facility of up to $US375 million ($429.55 million) to partially fund the proposed $US455 million acquisition.
Bumi, Indonesia's largest coal producer and second largest company on that nation's stock exchange, yesterday said in its second supplementary bidder's statement that it would guarantee the debt facility, which would be provided to its subsidiary Calipso Investment.
"Bumi does not expect the recent instability in the credit markets to affect its or Calipso's ability to raise debt," Bumi said in the statement.
Credit Suisse has arranged about $US2.4 billion in funding for Bumi since January 2006.
Bumi said it was able to meet its funding obligations as it had a market capitalisation of $US12.4 billion at the end of last year, net assets of $US890 million at the end of the September quarter and "a proven track record of raising debt expeditiously".
"Funds will be in the form of debt financing rather than an equity capital raising," it said.
Late last month, Herald said in an announcement to the Australian Securities Exchange that it was in discussions with other parties that had approached it.
Zinc and lead miner Perilya pulled out of the running at the time, selling its 8.86 per cent shareholding in Herald.
Yesterday, Herald said the discussions and its evaluation of Bumi's offer continued.
The target, which is planning the Dairi zinc and lead mine in Indonesia, has advised shareholders do nothing regarding Bumi's offer of $2.25 per Herald share for the time being. "The board of Herald reiterates its previous advice that you take no action in relation to the offer until your directors make their formal recommendation in the target's statement to be sent to you on or around January 22, 2008," the company said in yesterday's statement.
Shareholders will then have at least 14 days to make a decision.
Herald said in its 2007 annual report that it was frustrated by its failure to secure a permit from Indonesia's Forestry Minister, the final hurdle for full development of the Dairi project, which is expected to have an initial mine life of at least seven years.
Shares in Herald closed steady yesterday at $2.21.
AAP
HER Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
