Daily news - 19 Nov

Straits Asia gets US$300m loan from Stanchart
Straits Asia Resources, which owns two coal mines in Indonesia, yesterday said it had secured a US$300 million loan from Standard Chartered Bank. As part of the deal, Straits Asia is issuing to the bank 35 million warrants for new shares with an exercise price of S$1.095. The new 18-month facility will be used to refinance an existing US$230 million bridging facility and provide funds for capital expansion, said Straits Asia chief executive officer Richard Ong. 'We are targeting 20 million tonnes a year by 2011,' Mr Ong said in an interview with local media. This will be achieved by expanding production at its two mines at Sebuku and Jembayan in Indonesia, the latter acquired for US$350 million only last December, he said. So far this year, the company has mined about 6.5 million tonnes of thermal coal and output should hit 11 million tonnes next year, as the Jembayan mine has yet to reach full capacity, Mr Ong said. Straits Asia, which closed yesterday at a year-low of 75 cents, has fallen sharply off its high of $4.30 in January, on concerns that the demand for coal will falter with poorer economic conditions. The company recently reported net profit of US$28.4 million (or earnings per share of 2.6 US cents) on sales of US$168.9 million. Mr Ong is confident that margins can be protected going forward, even though spot prices of thermal coal in Australia, a benchmark for Asia, have fallen below US$100 a tonne from peaks of US$200 in July.

DBS Group's expansion in China stays on track
DBS Group Holdings' expansion plans in China remain on track despite the current global economic turmoil. The banking group, which recently cut its workforce - mainly in Singapore and Hong Kong - announced yesterday that DBS Bank (China) has opened its first sub-branch in Beijing and its first DBS Treasures priority banking centre in the Chinese capital at the newly relocated DBS China Beijing Branch. This is part of its plans to offer a comprehensive suite of services for corporate and individual customers in China. DBS Group CEO Richard Stanley said that Greater China remains 'an integral part of DBS' ambition to become a leading bank in Asia'. The latest move brings its total number of sub-branches in China to five, located in Beijing, Shanghai and Suzhou. DBS currently has six full branches in Beijing, Shanghai, Suzhou, Guangzhou, Shenzhen and Tianjin. Its representative offices are in Hangzhou, Fuzhou and Dongguan. It is now looking to open another branch in Nanning in southern China by the end of this year and is awaiting the approval from the China Banking Regulatory Commission to proceed. This year, DBS enhanced its presence in China with the upgrading of its Tianjin representative office to a full service branch and the opening of four new sub-branches and six DBS Treasures centres. In August, DBS relocated its Beijing branch to a more spacious location at Winland International Finance Centre in the West City District of the capital. The full branch offers a full range of products and services, including enterprise and corporate banking, consumer banking and private banking. In September, it launched its expanded 40-branch network in Taiwan.

Portman sale nets Noble A$118m profit
Noble Group's fourth-quarter earnings will be boosted by a A$117.7 million profit (S$116.2m million) from the sale of its stake in an Australian investment. However, the company's stock continues to head south as the cheer from its strong quarterly results fades and concerns set in over its longer-term profitability. Noble yesterday said in a regulatory filing that it has sold its interest in Portman Limited to Cliffs Asia-Pacific, a subsidiary of US-based Cleveland Cliffs. The initial purchase price of the Portman shares was A$26.4 million. The gain from this sale will be recognised in the fourth quarter ending Dec 31, it said. The company did not disclose its shareholding in Portman but said that it no longer owns any shares in the Australian firm following the divestment.

SPH tapping $150m in bank loans
Singapore Press Holdings has struck separate agreements with DBS Bank and OCBC Bank for unsecured term loan facilities totalling $150 million. The three-year loans will be used for working capital and general corporate funding, SPH said yesterday. The media group has an investment portfolio of about $1 billion, but this will not be monetised. Corporate communications division head Chin Soo Fang said: 'Current market prices are low due to the financial turmoil. We believe that funding our working capital needs through the loan facilities will allow us maximum flexibility in the deployment of funds to pursue appropriate business opportunities, should they arise.' For the year ended Aug 31, SPH registered cash and cash equivalents of $211 million, up from $122.2 million a year earlier. SPH said that the latest transactions would have no material impact on its earnings per share or net tangible assets per share for the current financial year.

Source: Kim Eng