Baker Steel Resources Trust Announces Financing and Potential Futura Transaction
Why we think this is good
The RNS announcement highlights several positive developments for Baker Steel Resources Trust's investment in Futura Resources, including a US$15m loan agreement, a potential transaction that would value Futura at around A$250 million, and the successful commissioning and ramp-up of Futura's Wilton and Fairhill mines. While the coking coal market has been subdued, the Futura management team remains optimistic about the longer-term outlook. Overall, the news represents a significant upside potential for the Company's investment in Futura.
Key Points
- Futura and IRH completed a US$15m loan agreement
- The Company provided a A$1.4 million bridging loan to Futura
- The Company and other Futura shareholders have signed option agreements giving IRH the right to acquire their shares at A$3.15 per share within 9 months, valuing Futura at an EV of around A$250 million
- Futura has successfully commissioned its Wilton open pit mine and is ramping up production at its Fairhill mine
- The coking coal market has been subdued, with prices declining, putting financial strain on the industry
Summary
Baker Steel Resources Trust Ltd (BSRT) has announced that its portfolio company Futura Resources has secured a US$15m loan from International Resources Holdings RSC LTD (IRH), and the Company has provided a A$1.4 million bridging loan to Futura. Additionally, the Company and other Futura shareholders, representing over 50.1% of the fully diluted share capital, have signed option agreements giving IRH the right to acquire their shares at A$3.15 per share within 9 months, valuing Futura at an Enterprise Value (EV) of around A$250 million. This potential transaction represents a significant upside for the Company's investment in Futura, which it currently carries at A$2.21 per share.