Stanmore suitor refuses to boost offer in line with new valuation

A squabble has broken out ­between independent experts Grant Thornton and BDO over the valuation of Stanmore Coal.

The planned takeover of Stanmore Coal has run into a hurdle.

A squabble has broken out ­between independent experts Grant Thornton and BDO over the valuation of Stanmore Coal, bringing some life to a takeover battle that otherwise looked ­headed for a stalemate.

Singapore’s Golden Invest­ments, which represents a consortium of Indonesian groups that own a 19.9 per cent stake in Stanmore, launched a $240 million, 95c-a-share bid for Stanmore in November but the bid has struggled to gain traction to date.

Stanmore announced greater production and profit guidance late on Monday, although Golden Investments was quick yesterday morning to kill off any expectations that it would increase its offer. It also declared its offer unconditional.

The decision came after Golden Investments commissioned Grant Thornton to study the independent expert’s report prepared for Stanmore by BDO. The BDO study valued Stanmore at ­between $1.48 and $1.90 a share, well above the offer price from Golden Investments.

Grant Thornton’s assessment identified what Golden Investments said were “material issues” in BDO’s valuation, “including a largely unexplained and unjustified six-fold increase in the value of (Stanmore’s) Isaac Downs ­development project in less than six months, and an apparent failure to apply market standard best practices in the use of selective coal price forecasts”.

Golden Investments director Mark Zhou said Stanmore shareholders had a compelling offer ­before them. “Our offer, and the indirect support it has been providing to the Stanmore Coal share price during the past eight weeks, will lapse in seven days, so shareholders need to act ­quickly,” he said.

The updated guidance from Stanmore shows the company now expects to produce 2.15 million tonnes of coal this financial year, up from its earlier estimate of two million tonnes. It also says it expects underlying earnings ­before interest, taxation, deprec­iation and amortisation of ­between $140m and $155m — a level that it says would support the board’s consideration of interim and full-year dividends.

Stanmore managing director Dan Clifford said the updated guidance reflected the progress the company was making in ­improving its performance.

“We’re now extremely confident on 2.15 million tonnes and a resultant increase in our EBITDA because we can see the underlying strength in the performance, our balance sheet, our no debt and the coal price,” he said.

Mr Clifford said it was clear the offer from Golden ­Investments was too low, regardless of the findings from Grant Thornton. “If you just look at EBITDA multiples and our trading price, we are ­wildly undervalued,” he said.

“People can argue all they like from an accounting perspective, but there’s some other realities in all of this as well, and our trading multiples are extremely low.”

Shares in Stanmore, which had traded as high as $1.08 in the weeks after Golden Investments launched its offer, fell 4c to 96c.