Wheels & Deals

 Comment

Pioneers of prosperity

Giles Parkinson

Published 12:12 PM, 30 Jan 2009



Straits Resources, still wrestling with the issue of what to do about its Singapore offshoot, has received a much need cash injection from the private equity arm of Standard Chartered Bank.

Straits is to issue $80 million of convertible notes to Standard Chartered Private Equity, which will give the group a fully diluted stake of around 17.5 per cent, making it the company’s largest shareholder.

Standard Chartered Private Equity is a financier for the Singapore based Straits Asia, in which Straits holds a 47 per cent stake, and made the initial approach to the Perth-based company.

Private equity has traditionally avoided resource companies, although there are increasing signs that this is changing. The Straits investment is the first in the mining industry for Standard Chartered Private Equity.

Straits, meanwhile, is continuing to review its options for its stake in Straits Asia, which was to be demerged late last year but that idea was pulled due to the volatility of the markets.

Straits says it has received several approaches about the stake, and is keen to see some of the value of the offshoot reflected in its own share price. Macquarie is advising on its options.

The notes to be issued to Standard Chartered Private Equity will have a face value of $1.45 a share, a 53 per cent premium to the current share price, and have a coupon rate of 4 per cent.

Straits favoured the use of notes because equity issues – particularly in the resources sector – have had to be made at large discounts, and the four-year maturity reflects Standard Chartered Private Equity’s investment horizon.



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