ADRO - Divests majority stake in AAI, focuses on green energy

ADRO - Divests majority stake in AAI, focuses on green energy Adaro Energy Indonesia (ADRO) plans to sell its entire stake, up to 7 bn shares, in Adaro Andalan Indonesia (AAI) through a public offering to shareholders (PUPS), reducing ADRO's ownership to approximately 90%. The transaction is valued between USD2,445.95 mn (31.8% of ADRO’s equity) and USD2,629.40 mn (34.1% of equity), with the share price set according to the Volume Weighted Average Price (VWAP) after AAI’s IPO and capped at 107.5%. The sale is part of ADRO's strategy to shift focus toward green energy projects, aiming for 50% of revenue from non-coal businesses by 2030. Following the divestment, ADRO’s consolidated revenue and net profit are expected to see proforma reductions of 65% and 64%, respectively, underscoring AAI's significant contributions. Post-divestment, ADRO will no longer hold thermal coal reserves but will retain 173 mt of metallurgical coal assets. This material transaction awaits approval at an Extraordinary General Meeting of Shareholders (EGMS) scheduled for October 18, 2024. (Source : Company) Comment : ADRO stands to gain approximately IDR37.45 tn from the sale of AAI shares through a PUPS, incurring a total tax of IDR245.4 bn from founder and final withholding taxes. AAI shares will be offered to all existing ADRO shareholders, and to boost IPO appeal, ADRO is considering distributing part of the proceeds as dividends, estimated at IDR1,170/ share. If successful, ADRO will benefit significantly up until AAI is officially listed on the exchange, gaining fresh funds for green energy projects and enhancing shareholder value through potential dividends.