Vallar Plc, one of two Nathaniel Rothschild investment vehicles, agreed to pay $2.1 billion for 75 percent of PT Bumi Resources Minerals Tbk to add mines and an 18 percent stake in Indonesia’s second-largest copper project.
Vallar agreed to pay 850 rupiah a share, or a 22 percent premium to the 30-day average closing price through May 27, for Bumi Resources, the Jersey, Channel Islands-based company said today in a statement. It will fund the deal through an issue of a convertible bond to parent company PT Bumi Resources Tbk with a 2 percent coupon and a 1,588 pence initial conversion price.
The transaction adds a stake in Newmont Mining Corp.’s Batu Hijau copper and gold mine to Vallar’s holdings in Indonesian coal producers PT Bumi Resources and PT Berau Coal Energy, acquired for $3 billion. Rothschild and former BP Plc Chief Executive Officer Tony Hayward yesterday announced a plan to raise 1 billion pounds ($1.6 billion) in an initial public offering of new investment vehicle Vallares Plc.
“The price looks sensible,” said Richard Knights, an analyst in London at Liberum Capital Ltd. who has a “buy” on Vallar. “Few mainstream institutional investors have focused on Vallar to now. This could trigger their taking a closer look.”
The company fell 0.2 percent to 1,200 pence by the 4:30 p.m. close of London trading, giving it a value of 2.5 billion pounds. It raised 707.2 million pounds in an IPO on the London Stock Exchange in July, selling stock at 1,000 pence apiece.
The latest acquisition “will give Vallar full exposure to a diversified suite of mining assets ranging from coal to copper and zinc,” Rothschild said today in the statement. The company also plans to boost its stake in coal miner PT Bumi Resources. Indonesia is the world’s largest thermal-coal exporter.
The two key assets acquired are the Batu Hijau stake and Dairi zinc and lead deposit, also in Indonesia, and they may be valued at $3.2 billion, Knights said. The purchase also includes iron ore assets in Mauritania and the Gorontalo copper project.
Vallar shareholders in April approved a plan to rename the company Bumi Plc. The company expects to be included in the FTSE 100 Index on the LSE, Rothschild said today.
Bakrie Group and Bukit Mutiara received shares in Vallar as part of the Bumi Resources and Berau Coal Energy transactions. Bakrie Group now owns about 54.6 percent and Bukit Mutiara about 13.2 percent, Vallar said in a statement on April 8.
PT Bumi Resources is likely to sell the convertible bond and use the funds to pay down “expensive debt,” Liberum said.