Having signed a letter of intent with ASSAC, White Energy said the combined company would be called White Energy South East Asia Corporation (WESEAC), with White Energy to hold 56% post merger and ASSAC to have the remaining 44% stake.

 

White Energy said it would manage the merged company, while ASSAC would maintain its ASE-listing but under the new WESEAC name.

 

Under the proposed merger, WESEAC will have exclusive rights to use White Energy’s unique patented coal upgrading technology.

 

WESEAC assets will include White Energy’s 51% stakes of two Indonesian joint ventures involving local coal players Bayan Resource Group and Adaro Energy as well as Japanese trading house Itochu Corporation.

 

The Tabang Coal Upgrade project, also known as PT Kaltim Supacoal, is a partnership with Bayan that is aiming to upgrade some 1 million tonnes per annum of low-grade coal to higher grade from the first quarter of 2009 and a higher 5Mtpa by 2011.

 

The Adaro Coal Upgrade project is looking at a similar upgrade of 1Mtpa and targeting 5Mtpa by 2012.

 

White Energy said the expanded capital of WESEAC would underpin further development of both projects as well as development of its binderless coal briquetting process which increases the energy efficiency and commercial value of lower rank coal.

 

Should the merger go ahead, White Energy will appoint four members to the board of directors for WESEAC and will also manage the new company, being responsible for its day-to-day operations.

 

White anticipates the merger to be complete within the next 60 days.

 

“The agreement is conditional on completion of due diligence; finalisation of definitive agreements; and requisite board, shareholder and regulatory approvals,” the company said.

 

White Energy managing director John Atkinson added: “The merger creates an extremely well-funded entity capable of building a number of cleaner coal upgrading facilities throughout Southeast Asia.”

 

Atkinson said the decision by ASSAC to invest $US110 million was a huge vote of confidence in White’s unique cleaner coal upgrading technology and the growing market for greener, more efficient coal.

 

White Energy said ASSAC’s only current asset was its $US110 million, meaning the Asian-focused investment group is providing all of the cash for the merger deal involving White Energy’s Indonesian arm of operations.

 

Shares in the Australian company were trading up 11% midday today at $1.73.