A mining and metals company made the difficult decision to accept a $256 million takeover offer, after revealing that it expects no exports for the following month.
Stanmore Coal has agreed to sell off the entire business to Singapore-headquartered Golden Investments Australia. The coal producer has asked investors to cooperate before the value of shares changes.
“The independent directors of Stanmore recommend you accept the offer,” chairman Stewart Butel said in a letter to shareholders.
“It is likely that the market for Stanmore shares will be less liquid than the market for Stanmore shares prior to the offer. A reduction in liquidity may mean that, if you do not accept the offer, it may be more difficult for you to realise your investment in Stanmore shares in the future.”
The remarks came just two days after the proponent predicted it would make no exports for the following month.
“Term customers have advised Stanmore in the past week that they will be deferring taking delivery of contracted coal shipments that they were due to take in June until later in the year,” company secretary Ian Poole said in a public statement. “This will now cause a material deferral in revenue and earnings with no sales now forecast for June, being a reduction of around 250 kilo tonnes of sales which were previously expected.”
This is expected to bring a 13 to 15 per cent drop in revenue for the entire 2020 financial year.
“The company has revised its underlying earnings before interest, taxes, depreciation, and amortisation guidance for the full year FY20 from $92M to $100M, to $80M to $85M,” Poole said. “This is due to further recent unfolding impacts of COVID-19 which are now expected to impact earnings in the June 2020 quarter.”
Stanmore gave no indication whether there would be job cuts and maintained a mixed outlook for the future of coal exports.
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“While Stanmore’s assets continue to have long term strategic value, and its operational performance continues to be strong, we acknowledge that there are risks and uncertainties inherent in the business in relation to matters such as coal prices and the future development of the company’s full asset portfolio,” Butel said.
At the time of publication Golden Investments owned more than a 50 per cent stake in Stanmore.