Manhattan in $1b deal to acquire mining firm Singxin
Acquisition to let it embark on business in China’s mineral mining industry
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Acquisition to let it embark on business in China’s mineral mining industry
Lee Meixian
23 May 2014
Manhattan Resources has signed a conditional agreement to acquire Singxin Resources for $1 billion through the issue of up to 1.37 billion new shares at 73 cents a piece.
This is a hefty price tag, given that Manhattan’s market capitalisation is only about $360 million. The issuance represents 73 per cent of the group’s enlarged share capital.
To counter the dilutive effects of the enlarged share base, Manhattan will offer a one-for-one bonus issue of 1.88 billion warrants to its existing shareholders and vendors at an exercise price of $1 per share. This is conditional on the completion of the acquisition.
Besides rewarding shareholders, the warrant issue will raise funds for the group in future, said Manhattan’s CEO and managing director, David Low.
Shares in Manhattan tumbled by as much as 15.5 per cent to 65.5 cents yesterday, before ending at 72 cents - still a 5.5 cent, or 7.1 per cent, drop from its pre-trading halt price and making it among the market’s top losers.
The new shares are to be issued to Indonesian mining tycoon Low Tuck Kwong, who controls Manhattan with a 53.85 per cent stake; Kaiyi Investment, owned by Dr Low and his immediate family as well as those of his son Low Yi Ngo and his daughter Elaine Low; Mining Alliances; and Asiaworld Capital.
Because the proposed acquisition is so substantial and involves an “interested person” - Dr Low - it will be subject to Manhattan shareholders’ approval.
Singxin Resources, after a restructuring exercise, will hold 70 per cent of GiantMiner, which in turn owns Urumqi Jinshi Huilong Mining Co, which has permits to explore three mines in Xinjiang, China.
This is not the first time Manhattan has shown interest in Xinjiang mining assets. Last month, it announced a call option to acquire up to 60 per cent of Starsmind Capital, a holding company which has an option for a stake of up to 39.4 per cent in Mineriver which holds a metals exploration permit in Xinjiang.
The board of Manhattan Resources said the acquisition will allow it to embark on a business in China’s potentially lucrative mineral mining industry with good potential for growth.
“The company has been looking at various investment prospects to create a stable revenue base for the company. Where there are current collaborations being explored in respect of the barging business, it is not expected to pick up dramatically. Hence, it is the intention of the company to diversify into mining,” it said.
Manhattan is primarily engaged in shipping and logistics for the coal and resources industries in Indonesia. In its latest concluded first quarter, its turnover fell 29 per cent to $4.7 million, due to lower coal transportation volume as well as higher compliance and charter expenses.