An Astra Group entity in the mining and energy business, PT United Tractors Tbk. (UNTR) prepared funds to acquire nickel mining company shares of around IDR 9.38 trillion from internal cash. UNTR is also eyeing revenue growth from the nickel business after the acquisition.
UNTR targets the acquisition of 19.99 percent of Nickel Industries Limited's shares worth A$943 million or around IDR 9.38 trillion to be completed in the third quarter of 2023.
UNTR through its wholly-owned subsidiary, PT Danusa Tambang Nusantara, announced the signing of the Share Subscription Agreement (SSA) today, Friday (9/6/2023).
The agreement is to take a 19.99 percent stake in Nickel Industries Limited (NIC). NIC is a listed company on the Australian Securities Exchange Ltd.
NIC is an integrated nickel mining and processing company with main assets located within or close to the Indonesia Morowali Industrial Park (IMIP), Sulawesi and Indonesia Weda Bay Industrial Park (IWIP), Halmahera.
NIC has an 80 percent stake in PT Hengjaya Mineralindo (a nickel mining company) which is one of the largest suppliers of high-grade limonite and saprolite ores to IMIP. NIC owns the majority stake and operates 12 lines of rotary kiln electric furnace (RKEF).
NIC is also expanding its battery nickel strategy through the conversion of its existing RKEF lines to produce class 1 nickel matte , as well as through an agreement to build a High-Pressure Acid Leach (HPAL) processing facility , to supply the growing market demand for electric vehicle batteries.
UNTR Corporate Secretary Sara K. Loebis conveyed that the UNTR Group and NCI were in the process of fulfilling the requirements for closing transactions. Therefore, it is not yet certain when the acquisition will be completed.
"The target for completion [acquisition] cannot be set yet and this is normal because both parties are in the process of fulfilling the closing transaction requirements ," he explained when contacted by Bisnis, Friday (9/6/2023).
After the transaction is completed, the UNTR Group will later receive more revenue from NCI's nickel business, according to Danusa's share portion in the company. Revenue can be recorded immediately because the NIC nickel mine is already in operation.
"Meanwhile, the acquisition fund is expected to come from internal cash," he added.
Citing financial reports as of March 2023, UNTR had cash and cash equivalents of IDR 46.35 trillion as of March 2023, up from IDR 35.71 trillion as of March 2022. The increase in cash occurred in line with the growth in revenue and net profit.
UNTR management said that until the first quarter of 2023, UNTR's consolidated net income reached IDR 34.9 trillion, an increase of 25 percent compared to the same period in 2022 which amounted to IDR 27.9 trillion.
The driving force is that each business unit, namely construction machinery, mining contractors, coal mining, gold mining, the construction industry, and energy, respectively contributed 31 percent, 33 percent, 30 percent, 5 percent, 1 percent, and less. of 1 percent of total consolidated net income.
In line with the increase in revenue, UNTR's gross profit increased by 23 percent from IDR 7.0 trillion to IDR 8.7 trillion. Meanwhile, profit attributable to owners of the parent entity or net profit also increased by 23% to IDR 5.3 trillion from IDR 4.3 trillion in the same period in 2022.
In an official statement, Sara explained that the completion of the issuance of new NIC shares to Danusa was subject to the fulfillment of the preliminary conditions as stipulated in the SSA including approval from NIC shareholders.
"After signing the SSA, the parties will use reasonable efforts to fulfill the preliminary conditions before the end date, no later than September 29, 2023," he explained.
UNTR President Director Frans Kesuma said the completion of this transaction depended on meeting certain prerequisites, including approval from NIC shareholders under the ASX Listing Regulations or the Australian Exchange.
The strategic acquisition of a minority stake in Nickel Industries is an important step in UNTR's business diversification.
"This move will build on our Group's integrated nickel strategy and expansion in the electric vehicle supply chain ," he added.
