PT Danusa Tambang Nusantara (DTN), the indirect subsidiary of Jardine Cycle & Carriage C07 , has subscribed for 857 million new ordinary shares in the capital of Australian Securities Exchange (ASX)-listed Nickel Industries for A$943 million ($850.1 million).
After the completion of the proposed subscription, the placement shares in Nickel Industries will represent 19.99% of Nickel Industries’ total issued ordinary shares.
DTN is a wholly-owned subsidiary of the Indonesia Stock Exchange (IDX)-listed PT United Tractors Tbk, acting as a holding company for the latter. Its focus is to expand its business in gold and nickel commodities. PT United Tractors Tbk is a 59.5% subsidiary of IDX-listed PT Astra International Tbk. PT Astra International Tbk, in turn, is a subsidiary of Jardine Cycle & Carriage.
Nickel Industries is a leading integrated nickel mining and processing company. Its key assets are located either within or in close proximity to the Indonesia Morowali Industrial Park (IMIP) in Sulawesi and the Indonesia Weda Bay Industrial Park (IWIP) in Halmahera. It has an 80% stake in the Hengjaya nickel mine which is one of the largest suppliers of limonite and high-grade saprolite ore to the IMIP.
The company also owns and operates majority stakes in four rotating kiln electric furnace processing facilities. Three of them are located within the IMIP.
Based on Nickel Industries’ audited consolidated financial statements for the FY2022 ended Dec 31, 2022, its profit before tax stood at US$217.0 million ($291.4 million). Its net assets as at Dec 31, 2022, stood at US$1.3 billion.
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Based on its closing price of 87 Australian cents on June 8, Nickel Industries’ market capitalisation is around A$2.62 billion.
The completion of the proposed subscription is subject to and conditional upon the approval by Nickel Industries’ shareholders.
The consideration amount took into account Nickel Industries’ historical earnings and growth potential. It will be fully funded by internal resources of the UT group.
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In addition, UT, through DTN intends to take part in a direct investment into the construction of NIC’s upcoming nickel sulphate high pressure acid leaching plant (HPAL) processing facilities. This will provide UT with more opportunities to expand its portfolio into the production of nickel products that are critical to the development of batteries and electric vehicles. With this, DTN has entered into a non-binding heads of agreement (HOA) with Nickel Industries. Under the HOA, Nickel Industries may nominate DTN to acquire a 20% interest in such a project, and the HOA is conditional on the completion of the proposed share subscription.
On a pro forma basis, if the proposed subscription had been completed on Jan 1, 2022, the profit before tax attributable to Jardine Cycle & Carriage’s share would be US$43.4 million, or 1.3% of the group’s total net profit of US$3.23 billion.
Shares in Jardine Cycle & Carriage closed 7 cents higher or 0.21% up at $33 on June 8.
