Rajawali ups stake in Archipelago

JAKARTA.One of the country’s conglomerates, PT Rajawali Corporation, is planning to purchase shares in gold miner Archipelago Resources Plc.

Archipelago, which is listed on the Alternative Investment Market (AIM) – the London Stock Exchange’s international market for small, growing companies – announced on Friday that Rajawali had tabled an offer to purchase a minority stake in the gold miner.

Rajawali, which is controlled by tycoon Peter Sondakh, already owns a 52.6 percent stake in Archipelago and is unconditionally contracted to acquire a further 0.35 percent in the company, taking its total shareholding to 52.98 percent.

According to information on Archipelago’s website, the offer price was set at 58 pence per share, putting the value of Archipelago’s total issued shares at £338 million (US$541 million). The offer price was also 18 percent higher than Archipelago’s share price at close of trading on Thursday.

Following the announcement, Archipelago’s share price rose by 17.35 percent to 57.5 pence as of 8:57 a.m. Eastern Time on Friday.

A number of Archipelago’s minority shareholders with a combined ownership of 15.5 percent are in irrevocable undertakings, meaning that they have decided to reject Rajawali’s offer.

Given these figures, Rajawali will need around £126 million to purchase the remaining stake in Archipelago. Archipelago’s chief executive officer, Colin Sutherland, said the offer would benefit minority shareholders.

“The offer is priced at a level that represents an opportunity for minority shareholders to realize their investments at an attractive cash premium to the prevailing market price, in view of the strategic move by Rajawali to restructure Archipelago into an Indonesian-listed entity,” he said.

Voicing a similar view, Rajawali’s managing director of business development and investment, Stephen Sulistyo, said the offer “was a fair reflection of the company’s true value and should be satisfactory to all Archipelago shareholders”.

Following the offering, Rajawali also said that it had proposed to remove Archipelago’s stock from the AIM. Moreover, Rajawali has also entered an agreement with the Archipelago shareholders who declined to release their shares in the offering. Under the agreement, the shareholders will have an option to transfer their ownership in the gold miner to Rajawali in return for cash and/or shares in an Indonesian company holding Archipelago assets, which will likely be listed on the Indonesia Stock Exchange (IDX).

Archipelago currently owns a 95 percent stake in PT Tambang Tondano Nusajaya and PT Meares Soputan Mining, which hold mining permits for the Toka Tindung gold mine. The holder of the remaining 5 percent in both Tambang Tondano and Meares is Rajawali.

The gold mine is located 34 kilometers northeast of Manado in North Sulawesi. Toka Tindung is estimated to have 2.69 million troy ounces of gold resources.

The Toka Tindung processing plant is already achieving nameplate production capacity of 1.7 million tons per annum, with recovery rates after processing averaging around 92 percent in the first quarter of 2012, according to Archipelago’s website. (Raras Cahyafitri)