TTA Increases Its Stake in Philippines Coal Venture SERI Targets 1 Million Tons Annual Production by 2015
Bangkok, Thailand / Cebu, Philippines, 21 November 2011 -- Thoresen Thai Agencies Plc ("TTA") announced today that it has made a direct investment in SKI Energy Resources Inc. (SERI), a coal mining business that controls an active coal mine as well as additional concessions in the Philippines' Cebu province. TTA has been involved in the venture since 2009, through a minority investment in Merton Group (Cyprus) Limited ("Merton Group"), which at the time, was the sole international partner in SERI. The US$ 25.3 million investment gives TTA, through its wholly owned subsidiary Soleado Holdings Pte. Ltd. ("Soleado"), 40% of the voting rights in SERI.
SERI's first site today produces approximately 10,000 tons of high quality, thermal coal per month, with plans to ramp up production to 20,000 tons by March 2012. SERI has plans to develop an additional two or three mine sites over the next two years that will increase production to 1 million tons per year by 2015. The company has signed a life-of-mine agreement with Glencore, the world's largest commodities trader, providing a guaranteed channel for all coal produced at the first mine site.
"Our decision to make a direct investment in SERI comes on the back of the company's proven capability to mine high quality coal at a commercial scale," commented M.L. Chandchutha Chandratat, TTA's President & CEO. "Beyond the first site, we have already identified two others and expect additional concessions to be awarded thereafter. We see this as a tremendous growth business, particularly since the Philippines remains today, a net importer of coal. As a result, SERI is positioned as an ideal domestic alternative that can compete on both quality and price."
TTA's investment comes in the form of US$ 5 million in cash and US$ 20.3 million of existing debt that will be converted into equity. Following the capital increase, TTA's direct economic interest in the venture will stand at 47.07%, while Merton Group and SKI Construction Group Inc ("SKI") will each hold 26.47%.
Alex Woodthorpe, who serves as Chairman and Managing Director of Merton Group and Chief Executive of SERI, said, "As any high growth business, SERI welcomes the additional injection of equity, particularly as we ramp up production at the first site and begin to look towards the development of a second and third. Rather than bring in a fourth partner, we are pleased to see TTA take an expanded role in the venture and look forward to working closely with the company going forward."
Albert Altura, President & CEO of SKI, added, "We are excited to see TTA take an additional interest in SERI and look forward to our continued cooperation with them and with Merton Group. We see SERI as a truly first-of-its kind endeavour in the Philippines. The company already represents the first ever underground commercial coal mine in the country. By putting a great deal of emphasis on world-class safety standards, we've been able to forge close relations with the local community and have already established SERI as the second largest employer in Danao, Cebu province. With the added vote of confidence TTA is announcing today, we are highly optimistic about bringing this business to its next level of development and growth."
SERI, which was established in 2008, now holds 12,000 hectares under coal operating contracts granted by the Department of Energy in the Philippines. It has an ongoing application for a further 8,000 hectares.
Thoresen Thai Agencies Public Company Limited ("TTA") is a strategic investment holding company listed on the Stock Exchange of Thailand (TTA:TB). Its investment strategy is to grow through a balanced and diversified business portfolio of transport, energy, and infrastructure assets, both domestically and internationally. Its evolution from a dry bulk shipping operator began in 2005 with an investment in subsea engineering firm Mermaid Maritime Public Company Limited which has since been listed on the Singapore Stock Exchange (MMT:SP). Since then, TTA has acquired interests in fertiliser and logistics ( Baconco Co., Ltd.) coal-related businesses (SKI Energy Resources Inc, Merton Group (Cyprus) Limited and Unique Mining Services Public Company Limited), petroleum tankers (Petrolift, Inc) and a port in Southern Vietnam (Baria Joint Stock Company of Service for Import Export of Agro Forestry Products and Fertilizers).