Coal miner Geo Energy Resources is expanding its transport and infrastructure presence with plans to invest US$127.5 million to acquire a 51% stake in two shipping companies specialising in commodities logistics.
"The acquisition is synergistic to the group’s business model, complementing its integrated infrastructure business activities, enhance service offerings and expanding the group’s customer base across various commodities-related markets in Indonesia," says Geo Energy.
From its core business of coal mining, Geo Energy is now building a 92-km road to haul coal produced from its mines to the coast for export. It plans to lease capacity of this road to other nearby coal mines too.
The two shipping companies are PT Trans Maritim Pratama and PT Bahari Segara Maritim. These two entities together own 27 tugboats and 27 barges with transport capacities ranging from 5,000 tonnes to 10,000 tonnes.
Geo Energy's executive chairman and CEO Charles Anthonny Melati and his family own shares in TMP.
Geo Energy will pay for the stakes by issuing a combination of shares and cash.
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First, the company will issue 275 million shares worth US$86 million at 40 cents each, which is a 13% premium above the three-month volume weighted average price of 35 cents.
Geo Energy will also pay US$23.5 million in cash, and also an assignment of receivables worth US$18 million.
The company will be calling for an EGM to get shareholders' nod for this deal.
Geo Energy Resources shares closed at 38 cents on Aug 27, unchanged for the day but up 31% year to date.
