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Stanmore Coal stands its ground on “inadequate” Golden Investments offer

Stanmore Coal Limited (ASX: SMR) has this morning issued a statement from Chairman Stewart Butel, further attacking the adequacy of the takeover offer made by Golden Investments. The back-and-forth between the two companies has escalated this week in the lead-up to 22 January, when the ‘best and final’ offer will lapse.

The statement reinforced Stanmore’s position that the offer is an inadequate reflection of the value of Stanmore’s business, given its ‘strong operating performance, portfolio of high-quality development projects and positive outlook’.

Stanmore pointed to its operating performance since the $0.95 per share offer was made. It cited its strong December quarter production and sales results, as well as upwardly revised FY19 production and EBITDA guidance. Stanmore argues that the offer does not reflect this performance.

Additionally, Stanmore fought back at the Grant Thornton report released earlier this week by Golden Investments, announcing BDO’s defence of the valuation assumptions built into its independent review. BDO offered one concession by revising its estimate of the value of the Wotonga South Payment but stated that this was immaterial to its conclusion that ‘the Offer is not fair and not reasonable’.

Grant Thornton was not privy to BDO’s financial models underpinning a valuation range of $1.48 to $1.90 but used its own valuation assessment to deduce a far lower range of $0.84 to $1.10. Two days ago, ASIC concerns forced Golden Investments to retract the portions of Grant Thornton’s review which evaluated the impact of changing key assumptions on the ultimate valuation of Stanmore.

Dividend and buyback announcement

Stanmore Coal also announced a fully franked interim dividend of 3¢ per share this morning, as well as an on-market share buy-back for up to 10% of its ordinary shares.

Investors failed to react positively to the news with shares trading flat this morning, having hovered around the $0.96 level since Tuesday when Golden Investments announced it would not be budging on its offer.

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Motley Fool contributor Cale Kalinowski has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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