The Environmental Resources Investments (ERI) Group has got a Rs. 4.5 billion cash infusion following the connected British Virgin Island registered ERL selling an investment listed on the Toronto Stock Exchange.
ERI said yesterday Environmental Resources Ltd BVI (ERL), a company incorporated in the British Virgin Islands which is part of the ERI’s investments, had disposed of 24,048,760 shares of Eastern Platinum Ltd (ERL), which is one of ERL’s investments on the Toronto Stock Exchange (Public-TSX; ELR; ISIN # CA2768551038) at a price of Canadian Dollars 1.72 per share for a total consideration of Canadian Dollars (CAD) $ 41,363,867.20.
At current exchange rate, this amounts to around Rs. 4.5 billion.
ERI at present has an agreement for the purchase of the entirety of the shareholding of ERL for a maximum price of US$ 76 million of which $ 18 million approximately has been paid to date. This works to about 24% stake in ERI and remaining stake up to 100% to be acquired via payment of seven more tranches ending 2012 with cash inflow from Warrants.
Ahead of the announcement ERI saw its share price zoom to Rs. 118 from its Friday’s closing of Rs. 114. However it finished the day at Rs. 109.70, down by Rs. 4.30 which some analysts attributed to the impact of overall profit taking witnessed in the market.
In total 1.6 million ERI shares traded for Rs. 183.5 million. The Company’s warrants also closed lower.
There is no direct benefit to ERI from the sale unless ERL declares a dividend or reinvests again aiming for capital gains. The Eastern Platinum shares were priced at $ 1.48 as at 31 March, 2010.
ERL also has two other investments — Ferrox Holdings Limited (103,598,553 shares worth $ 43.5 million as at 31 March, 2010 and Mukuba Resources Limited (5,047,553 shares worth $ 2 million as at 31 March, 2010).
After being out of Top 20 most valuable companies league ERI has been enjoying its return since early this year.
ERI Group recorded a revenue of Rs. 792.9 million for the first six months of 2010/2011 displaying 239% increase compared to 31 March 2010 year end. Group recorded a Net Profit After Tax of Rs. 212 million for the first six months ended 30 September 2010 with 95% increase compared to 31 March 2010 year end. Net Asset Value of the group has increased from Rs.18.29 per share to Rs. 22.71 recording a 24% increase compared to previous year.
In the first half of 2010/11 financial year net profit attributable to equity holders amounted to Rs. 74 million, in comparison to a loss of Rs. 17 million in the corresponding period of last year. Second quarter figure was Rs. 63 million as against a loss of Rs. 14 million a year earlier.