Miner’s cash call fires up punters
BILLIONAIRE financier Nat Rothschild is putting his money where his mouth is again and punters piled in on the news yesterday.
Rothschild has agreed to underwrite a £66m ($100m) rights issue for coal miner Bumi, now known as Asia Resource Minerals.
The long running saga of the ill-fated miner will enter another chapter – Rothschild’s promise will allow ARMS to start renegotiating its debts. The shares jumped 35pc on the news of his pledge.
The tricky talks with bondholders will kick off this week. It hopes to extend £296m ($450m) of bonds due in July and £329m of 2017 loan notes.
For anyone who has forgotten the details of Bumi’s rocky history a short version reads: Indonesia’s Bakrie family and Rothschild created a complicated £2bn joint venture in 2010 but the two sides spectacularly fell out after boardroom rows, fraud allegations from a whistleblower and financial scandal.
In 2013, in a £330m deal, the Bakrie family bought back the Bumi Resources division and London listed Bumi was renamed Asia Resource Minerals and retained an 85pc stake in PT Berau Coal Energy. Rothschild floated it at 1000p back in 2010.
Investors have to have nerves of steel in this stock. It has lost well over 90pc of its value since cracks appeared back in 2012. Its market cap is now around £50m.
Last month chairman Samin Tan, who holds around 23pc, tried to wrestle control of the Asia Resources board and remove chief executive Amir Sambodo and other directors. But Rothschild, who owns around 17.5pc, emerged victorious when shareholders last week rejected Tan’s attempt to gain control of the board. Wallace King, who Rothschild tried previously to install, has now become permanent chairman. Investors are clearly backing Rothschild and hope negotiations with lenders go well. The shares soared 4.88p to 18.88p yesterday.
There was a bit of a shock for fund managers including GLG – owned by Man Group (down 7.5p to 168p) – and Henderson Global Investors as yesterday Max Petroleum admitted it is in desperate need of a debt restructuring.
AIM-listed Max revealed that the tumbling oil price – down more than 50pc since June – has had a ‘very severe adverse impact’ and it is ‘unviable’ as a business unless it gets hold of more cash and can restructure its debt with Sberbank. Analysts at SP Angel said the news did not ‘come as a surprise’ because it was ‘barely making sufficient cash flow to, break even anyway before the decline in the oil price’. GLG holds a near 15pc stake while Henderson owns almost 12pc and its shares collapsed 80.7pc or 0.46p to 0.11p.
Across the wider market the sentiment was subdued. But despite the weak Chinese trade data mining stocks were in surprisingly rude health. The City hoped the weak data out of Asia would mean Beijing could step up measures to ease policy to help keep China’s GDP growth on track. This in turn would help commodity prices and punters pushed the buy button on miners with precious metals miner Fresnillo up 36p to 896p, commodities trader Glencore 10.2p better at 275.6p while Anglo American advanced 38.5p to 1184p.
Concerns about Greece and the anti-austerity plan of Greek prime minister Alexis Tsipras continued to weigh. Despite concerns the interest in the mining stocks meant the FTSE 100 only fell 16.29 points to 6837.15. The FTSE 250 was 106.42 points weaker at 16,579.21.
Insurer RSA was out of favour after scribblers at Deutsche Bank trimmed their operating earnings forecast because of lower interest rates. Deutsche expects 2015 earn- ings to have fallen 10pc below the current analyst consensus and its shares slipped 15.3p to 439p.
Analysts blamed the rise in the bond yields and the weakness of US energy firms as a reason for the poor performance of UK utility stocks yesterday. United Utilities lost 31p to 962.5p and fellow blue chip stock Severn Trent eased 46p to 2050p.
HSBC’s Swiss banking scandal took 10.2p of its share price to 610.6p. Investors began to worry about other lenders and Barclays lost 1.8p to 253.65p and Royal Bank of Scotland fell 3p to 381p.
Mid-tier smoke and heat detector maker Halma fell the most in four years after analysts at JP Morgan Cazenove took the red pen to their rating.
They reduced their recommendation to underweight – a sell – from neutral and said the stock was trading at a five year high and it now expects lower levels of growth for the business. The shares tumbled nearly 4pc or 27.5p to 678.5p. BRITISH chip designer ARM has snapped up a Dutch firm that will help it to move further into the Internet of Things, where everyday household items connect to each other over the internet. ARM has acquired Offspark, which will give it access to more security and software encryption technology. But shares, which have climbed by a fifth in the last year, slipped 24p or 2.2pc to 1055p.