Photo Credit : APBI-ICMA

JAKARTA (TheInsiderStories) – Shares of PT Trada Alam Mineral Tbk (IDX:TRAM), previously known as PT Trada Maritime Tbk, has recorded a 6.9 per cent increase in its share price to Rp155 on Monday (4/12). While shares of PT SMR Utama Tbk (IDX: SMRU) gained 0.4 per cent to Rp498.

The two companies shares rises in the past few days were seen as a result of corporate actions that are being undertaken.

The Indonesia Stock Exchange (IDX) reported that transaction in SMR Utama through negotiated market (crossing of shares) reached Rp3.14 trillion (US$232.59 million), representing 28.7 per cent of the total market transaction on Monday, involving three securities firms, namely PT Ciptadana Sekuritas Indonesia, PT Jasa Utama Capital, and PT Mega Capital Sekuritas.

There were also trading of SMRU shares between PT Anugerah Securindo (seller) and PT KGI Sekuritas (buyer), the IDX data showed.

The companies have yet to disclose information on the possible corporation actions, however, market participants have been notified recently by the management of Trada that the company has signed sale and purchase agreement on Sept. 8, 2017 to acquire 50.1 per cent shares of SMRU from PT Lautan Rizki Abadi which was also the majority shareholder of Trada Mineral.

In November 21, Trada Mineral management had informed to IDX that it had obtained Rp3.13 trillion loan from UOB Kay Hian Credit Pte Ltd with a tenor of ten years, used to fund the acquisition of SMR Utama shares.

Trada Mineral is now also offering 39.89 billion new shares through preemptive rights scheme, representing 80.39 per cent of its enlarged capital, with a price of Rp150 per unit, to raise total proceeds of Rp5.98 trillion.

In addition, the company also issues 3.32 billion warrants as incentives, representing 34.17 per cent of its enlarged capital, priced at Rp155 per unit. The trading of the rights is scheduled for Dec. 13-15, 2017 and Dec. 18-19, 2017.

PT Graha Resources acts as the standby buyer and would hold 20.57 per cent shares in Trada Mineral after rights issue. Graha Resources is affiliated to PT Trada International and PT Trada Resources Indonesia that now hold 13.42 per cent and 12.16 per cent Trada Alam Mineral shares respectively.

After the rights issue, the two companies would each only hold 2.63 per cent and 2.38 per cent Trada Mineral shares. Meanwhile, public investors will maintain 74.42 per cent of Trada Mineral shares ownership.

Trada Alam Mineral said that around 93.3 per cent of the proceeds of the rights issue will be used to fund the acquisition of over PT Semeru Infra Energi and PT Black Diamond Energi. While the remaining proceeds will be used for working capital including repairing vessels, equipment, and payment to contractors.

Trada Mineral will acquire Semeru Infra Energu at price of Rp504.9 billion and acquire Black Diamond Energi for Rp99.9 billion.

Trada Alam Mineral will then inject Rp1.5 trillion to Semeru Infra Energi and Rp375 billion to Black Diamond Energi. Semeru Infra Energi will use the funds to pay Rp927 billion debts to Heru Hidayat and Graha Resources and pay Rp573 billion debts to UOB Kay Hian Private Limited.

This is an affiliated transaction as SIE and BDE are shareholders (directly and indirectly) of coal miner PT Gunung Bara Utama. TRAM also acquired SMRU at Rp3.13 trillion.

Trada Mineral said that the acquisition of Semeru Infra Energi, Black Diamond Energi, and SMR Utama is aimed at increasing shareholders’ value. The company seeks strategic opportunities through adding business segments such as energy, mineral resources, coal, and other supporting facilities.

Semeru Infra Energi and Black Diamond Energi are indirectly and directly own a coal miner Gunung Bara Utama, located in West Kutai, East Kalimantan province, with big coal reserves and resources.

Meanwhile, SMRU has mining contractors PT Ricobana Abadi and PT Delta Samudera, which are engaging in coal mining business. Trada Alam Mineral said it will synergize its shipping business especially dry bulk, with coal mining firm and mining contractors.

Gunung Bara Utama recently awarded coal mining contract to Thiess, member of CIMIC Group Limited. CIMIC informed market participants early September this year that Thiess has been awarded a seven-year contract by Gunung Bara Utama with total revenues of A$437 million.

Coal Mining

Trada Alam Mineral through Ricobana Abadi mined 2.69 million tons of coal last year. Ricobana handled 24.96 million bcm of overburden last year to reflect stripping ratio of 9.29 percent. Its main client was PT Gunung Bara Utama under the 2015-2019 contract.

It is not entirely clear of whether Ricobana would continue serving GBU Coal after the entry of CIMIC’s Thiess.

Ricobana is also contractor for PT Atlas Resources Tbk (IDX: ARII), a coal company listed on IDX. Dynamics of the relationship between Trada and Thiess would be interesting to watch.

Thiess had a difficult relationship with Bakrie Group following the acquisition of both PT Arutmin Indonesia and PT Kaltim Prima Coal by Bakrie-controlled PT Bumi Resources Tbk (IDX: BUMI), which was later on developed own mining services company PT Darma Henwa Tbk (IDX:DEWA).

Will a Gunung Bara Utama under Trada Alam Mineral affect dynamics with mining contractors like Thiess?

Trada Alam Mineral’s future might be in coal mining business because the company plans to offload more of its existing fixed assets to repay loans to some lenders. The company’s revenues from shipping and logistic already dropped 27 per cent to US$10.5 million in the first half of 2017 due to the smaller fleet in operation.

As to whether it can be materialized, depending on Trada Maritime’s ability to get more financing support from market participants. Thermal coal price (currently around US$95 per ton) might support, but some are still worried about mid-long term outlook of the commodity. One thing, Trada Alam Mineral might be lifted to the new crazy level once more.

Background

Concern on Trada Alam Mineral emerged in November 2014 mostly on settlement of the troubled shipping and marine services company to lenders. On May 28, 2014, International Finance Corporation declared Trada Alam Mineral was defaulting the loan facilities.

By Nov. 24, 2015, the state-owned PT Bank Mandiri Tbk (IDX:BMRI) declared Trada defaulting on long-term debt facility provided for the financing of MT Samudera Bangsa vessel. Other lenders followed, resulting in worsening financial indicators of the company.

IFC, an investment arm of World Bank, might escape from deeper financial issues with Trada because on Feb. 22, 2016, Trada reached an agreement with the insurance regarding the settlement of the claim of Lentera Bangsa vessel, which was collapsed in 2011.

Trada later on received US$24 million insurance claim related to Jelita Bangsa, portion of which was used to reduce its debts to IFC and the Bank of Tokyo Mitsubishi UFJ (BTMU).

Written by Yanto Jose

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