GOLDEN Energy and Resources (Gear) on Saturday (Mar 18) announced an increase in consideration in relation to its proposed break-up and delisting, following criticisms that the deal&rsquo s terms were unfavourable for minority investors.

 

The exit offer price will be raised by 13 per cent to S$0.181 per share, from S$0.16.

 

The cash alternative price will be raised by 18 per cent to 6,500 rupiah, from 5,500 rupiah, with the revised cash alternative price being paid in Singaporean dollars based on a fixed exchange rate of S$1 to 11,432.09 rupiah.

 

For each share held as at the record date, entitled shareholders can thus elect to receive 1.3936 shares of Indonesia-listed thermal coal producer Golden Energy Mines (Gems), or a cash consideration of S$0.792. Gem shares closed at 6,425 rupiah on Friday.

 

Shareholders of Gear who opt to receive Gems shares will now get a total effective consideration of S$1.066 per share, a 2 per cent increase from S$1.045, the illustrative consideration under the original Gems shares consideration and cash.

 

It is, however, only an increase if current rates were used towards this calculation, the bourse filing noted. The value per share is 7.8 per cent lower, at S$0.964, in a like-for-like comparison using Gems&rsquo 7,100 rupiah closing price and exchange rate of S$1 is to 11,180 rupiah on the original last trading day.

 

To further illustrate, if the revised terms are approved at the extraordinary general meeting, an entitled shareholder who holds 10,000 shares and tenders all these shares for acceptance under the exit offer will receive either S$9,733.66, or 13,936 Gems shares and S$1,810.

 

The new consideration was arrived at by taking into account the financial performance of Gear and its subsidiaries for the year ended Dec 31, 2022, and the business outlook as described in the company&rsquo s results announcement on Feb 27.

 

Financial resources available to the company, its major shareholder Dian Swastatika Sentosa and its offeror Duchess Avenue were also considered.

 

Gear additionally noted that the closing prices of its shares have not exceeded the revised all cash consideration of S$0.973 since its shares resumed trading in December 2016 following a reverse takeover exercise.

 

The proposals came as Gear seeks to reduce its exposure to energy coal by shifting away from its existing energy coal business currently conducted by Gems through the proposed distribution.

 

In a Nov 9 bourse filing, Gear had said that such segregation will allow the group to reposition itself away from the energy coal industry which is currently facing environmental, social and governance pressures. This will allow the group to &ldquo expand on its financing options which would otherwise have been relatively limited if it were to be continuously exposed to the energy coal business&rdquo , it stated.