Vallar Plc

This article seems to summarise the RNS better than my thread starter.

http://www.proactiveinvestors.co.uk/companies/news/18144/vallar-plc-propose-600m-listing-in-london-ahead-of-major-resource-acquisition-18144.html

SM

http://www.investegate.co.uk/article.aspx?id=201007090700131039P&fe=1

Placing completed - 68.7m shares at £10. It will be very interesting to see where this £700m-odd is deployed.

SM

Iron ore and/or coal in North or South America, according to Bloomberg.

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aQDV62s552gw

How some people get funded amazes me. Can I have a billion dollars please? I have seen some mining stocks that I like. Yes of course, there you go ... ;-)

Interesting to see that Vallar reported that it held cash worth 995p as of a month ago (I know, asleep att the back of the class and missed it).

So, its now at a small discount to cash.

In reply to djpreston, post #4

Interesting to see that Vallar reported that it held cash worth 995p as of a month ago

Yes, and the discount has increased further as Vallar (LON:VAA) is now 935p to buy following a drop-off this week.  So priced at a 6% discount to cash (invested in STG-denominated money market instruments) with the potential for a revaluation when details emerge of any asset deals that are concluded.  Coal and iron ore seem to be the main objective, and this article suggests Vallar is currently bidding for Columbian coal assets.

Next news not expected until November (30-Sep Interims), unless a deal is announced in the meantime.

SM

Vallar (LON:VAA) announced the big acquisition this morning - a $3bn purchase of 75% of PT Bumi Resources Tbk ("Bumi") and 25% of PT Berau Coal Energy Tbk ("Berau").  Trading in Vallar shares has been suspended as the proposed acquisition is classed as a reverse takeover and regulatory approval is required.

Creation of London‑listed Indonesian coal champion

 ·      Vallar to purchase 75% of Berau and 25% of Bumi

 ·      Consideration of approximately US$3.0 billion made up of a combination of cash and new Vallar Shares

 ·      Significant benefits identified for stakeholders in each of Bumi, Berau and Vallar through:

-       maximising the potential of the largest coal producing assets in Indonesia

-       leveraging management experience, industry relationships and access to capital

-       exposure to the largest and fifth largest Indonesian coal producers by production (78Mt in 2010) with a significant resource base (12bn^1,2 tonnes in aggregate) and track record of profitability (EBITDA of US$350m³ and US$1,431m⁴ for Berau and Bumi respectively for last twelve months)

 ·      Exposure to the fast growing Indonesian and pan-Asian region

 ·      Intention to seek a Premium Listing on the Official List of the Financial Services Authority and trading on the Main Market of the London Stock Exchange and, subject to applicable laws, explore a potential listing on the Indonesia Stock Exchange

 ·      Collaborative partnership with two of Asia's most dynamic business families

 ·      Mandatory offer to be made to the minority shareholders of Berau and intention to increase ownership in Bumi during 2011

 ·      The Board of Directors of Vallar will be led by Indra Bakrie and Nathaniel Rothschild and will have a strong Indonesian presence. Vallar's existing board representatives will remain (with the exception of Robert Sinclair) and the Company will have a majority of Independent Non-Executive Directors. Sir Julian Horn-Smith is to be appointed as Deputy Chairman and Senior Independent Non-Executive Director

 ·      Bakrie Group will be the largest combined shareholder in Vallar with 43.0%⁵ of Vallar Shares and will have the right to nominate three directors including the position of Chairman, Chief Executive Officer and the Chief Financial Officer and will continue to control the management, operations and policy of Bumi

 ·      Consistent with Vallar's stated strategy at the time of its initial public offering ("IPO")

 ·      Vallar Plc will be renamed Bumi Plc

LONDON/JAKARTA, Nov 16 (Reuters) - Indonesia's powerful Bakrie family has joined forces with the Rothschild banking dynasty to cement its dominance of Indonesia's booming coal sector, announcing a deal that will combine stakes in three companies and list in London.

Bakrie Group, run by the family of politician and tycoon Aburizal Bakrie, is joining miner Berau Coal with prize asset PT Bumi Resources in a share swap deal with Vallar , the mining investment fund established by financier Nathaniel Rothschild earlier this year.

Bakrie will gain majority control of London-listed Vallar and rename it Bumi Plc, a symbol of a move that means Indonesia's biggest coal producer gains a greater share of the global market.

"This is a reverse takeover where the Bakrie Group is regrouping its coal mining assets," said Norico Gaman, the head of research at Jakarta brokerage PT BNI Securities. "Vallar is only a vehicle for the Bakrie Group to consolidate its assets."

"Bumi is now aiming to become one of the biggest global players in the coal industry," Gaman added.

As part of the deal, Vallar will pay $3 billion in cash and new shares to buy a 75 percent stake in Berau and 25 percent of Bumi in its first deal since raising $1.1 billion and listing in July.

"We've announced the creation of an Indonesian coal champion... (that) is going to be the largest supplier of thermal coal to China," Vallar co-founder Nathaniel Rothschild told a conference call in London.

"This is a business that by 2013 should produce 140 million tonnes of coal a year."

Bakrie Group will own 43 percent of Bumi Plc, while 28.3 percent will be owned by exisiting Vallar ordinary shareholders.

Bakrie & Bros , the holding firm for Bakrie Group, said on Tuesday it swapped 5.2 billion shares in Bumi at 2,500 rupiah a share, or a 2 percent discount to Bumi's closing price on Monday, for new shares in Vallar.

Bakrie & Bros said in a statement it will control management appointments for both Bumi and Vallar.

Bumi already controls 10 percent of the global thermal coal market, while Berau is the fifth biggest coal firm by output in the world's largest exporter of thermal coal, which is seeing growing demand from utilities in India and China.

http://uk.finance.yahoo.com/news/update-2-rothschild-s-vallar-bakrie-team-up-on-indonesia-coal-targetukfocus-50f4dd87ec00.html

The suspension of trading has been lifted this morning, and the market is now able to apply a value to the company following the Bumi deal. Up 10% currently...

I suspect there will be a boost to miners of both thermal and coking coal due to the flooding in Queensland.  With the port of Newcastle closed down for exports due to rail lines to it being submerged by flood water, there's opportunity to pick-up companies that are well-placed to respond and meet demand, and there will no doubt be a continuation of the higher prices already seen this week.

Crude oil and thermal coal prices set fresh 27-month highs on the first session of the new year and added to inflationary concerns in developing economies.

The surge came amid a forecast of cold weather in the US, the world’s biggest oil consumer, robust growth in the manufacturing sector in Asia and Europe and heavy flooding in Australia, the world’s second largest thermal coal exporter.

Thermal coal in the Australian port of Newcastle, the benchmark for the key consuming region of Asia, spiked above $130 a tonne, a fresh 27-month high. Thermal coal – used to fuel power stations – for delivery in three months was quoted at $133.6 a tonne, up 3.3 per cent on the day.

The price of coking coal, used in making steel, has also soared. Australia accounts for about two-thirds of the global seaborne market for coking coal.

http://www.ft.com/cms/s/0/612379a4-1746-11e0-badd-00144feabdc0.html#axzz1A1AlD6RD

US coal miners rally, eye exports on Australia floods

NEW YORK/HOUSTON, Jan 3 (Reuters) - U.S. coal miner shares rallied on Monday as massive floods in Australia disrupted a big chunk of the world's metallurgical coal supply, driving up prices and causing Asian importers to hunt for alternatives.

Floods in northeast Australia have brought most mining operations to a halt in Queensland, which produces the bulk of Australia's steelmaking coal. Australia is the largest exporter of the grade, exporting about 125 million tonnes, with the United States a distant second at 33 million tonnes in 2009.

http://www.reuters.com/article/idUSN0352325220110103

I see the recently acquired stake in Bumi by Vallar (LON:VAA) will benefit through it's proximity to China and India who still require vast amounts of thermal coal for their power stations. 

SM

And further acquisition potential of coal assets, I note, also reported in the FT.  I can really see this company taking off this year, especially if it makes the cut for the FTSE100 as is likely, and also if it usurps Xstrata as the world's largest producer of thermal coal.

Vallar eyes acquisitions to follow Asian deal

http://www.ft.com/cms/s/0/0b0a3862-177a-11e0-badd-00144feabdc0,s01=1.html#axzz1A1EyRPff

I've just found this new presentation on the Bumi website which includes a huge amount of detail on the operations in Indonesia, with thermal coal reserves and production numbers.  The production graph and forecast on P.5 is interesting as it shows how JKX:BUMI intends to increase output from an estimated 64m tonnes in 2010 to an estimated 113m tonnes in 2013.

Overview

• One of the largest coal exporters globally
• KPC is the largest export coal mine in the world
• Leading natural resources group in Indonesia and the largest thermal coal producer in Indonesia, with together (KPC and Arutmin) commanded a dominant 26.6% market share of Indonesia coal production in 2009
• Estimated 60m tonnes of coal production in 2010
• 2.860 billion metric tonnes of marketable coal reserves and 10.024 billion metric tonnes of coal resources (excluding reserves)
  Large potential for reserves expansion; KPC only partially explored
• Ideally located to serve important markets in Asia, Europe and South America
• Open cut mining with captive coal processing facilities
• Dedicated coal loading terminals and port facilities
• New growth into mining related sectors, such as zinc, lead, copper, gold, iron ore and coal bed methane, to diversify business portfolio

Vallar (LON:VAA) this morning announced a simplification of the corporate structure to aid transparency. This is certainly welcome as the cross-holdings between Vallar, Bumi and Berau were not easily understood.

The re-organisation will see 75% of PT Bumi Resources Minerals transferred to Vallar, who will also increase ownership in PT Bumi Resources.

Vallar announces today a major re-organisation through the transfer of 75 per cent.1 of PT Bumi Resources Minerals Tbk ("BRM") to Vallar (the "BRM Proposal") and the increase of its ownership in PT Bumi Resources Tbk ("Bumi Resources") (the "Bumi Resources Step-Up Transaction"). The BRM Proposal represents major progress in the delivery of Vallar's strategy to augment its core focus on coal by adding a portfolio of base metals, iron ore and precious metals assets across multiple geographies. The consideration for the BRM Proposal will be in the form of listed convertible bonds to be issued to Bumi Resources for a total consideration of approximately US$2.07 billion with a 2.0 per cent. coupon and a £15.88 initial conversion price.

Also, the impediment to the renamed group Bumi plc obtaining it's full listing has been resolved, following a review of the accounting treatment of exploration and development costs incurred in 2007 and 2008 in relation to certain assets now owned by Bumi Resources Minerals.  The finalising of this historic financial information now clears the way for the introduction of Bumi plc as the premium listed parent company of Vallar by the end of June 2011, and entry into the FTSE 250 in the September review (or FTSE 100 at a push, depending on free float calculations).

As ever, FT Alphaville sums up the news well:

"Few mainstream institutional investors have focussed on Vallar till now – we feel this could trigger their taking a closer look."

That’s Liberum Capital talking about Nat Rothschild’s original London-listed shell company, Vallar. (Its sister company Vallares was launched on Thursday).

Now, there’s a very good reason institutional investors have shunned this company: the sheer complexity of its transactions. (It’s also not cheap either — 15 times 2012 earnings — and then there’s the issue of Bakrie Brothers, which we shall return to later).

http://ftalphaville.ft.com/blog/2011/06/10/590721/untying-vallars-gordian-knot/

Well worth a read.

SM