The Downer EDI Limited (ASX: DOW) share price is out of form on Monday morning. This comes after the company announced the sales of its Open Cut Mining East business.
At the time of writing, Downer shares are edging 1.26% lower to $6.675.
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Downer divestment
In its release, Downer advised it has entered into a sales agreement with the Australian subsidiary of PT Bukit Makmur Mandiri Utama (BUMA).
Established in 1998, BUMA is currently the second largest independent coal mining contractor in Indonesia. The company holds around 20% market share in the country, providing coal mining services to large Indonesian firms.
BUMA's operations are supported by roughly 12,000 employees as well as being equipped with over 2,500 units of heavy equipment.
Downer will receive about $150 million in cash proceeds for its Open Cut Mining East business. So far, BUMA has paid a deposit of $16 million with the remaining amount to be paid at the sale completion.
The transaction includes the transfer of the assets, liabilities, employees and all existing contracts.
Downer noted that this is the final step of its divestment. Together with the previously announced sale of its Mining and Laundries business, Downer has received a total of $778 million.
Undoubtedly, the additional cash injection has failed to have a positive effect on the Downer share price.
Commenting on the sale, Downer CEO, Grant Fenn said:
An important part of our Urban Services strategy was the exit from our capital-intensive Mining businesses.
The sale of Open Cut Mining East is the last step of this process and follows the divestments of Open Cut Mining West, Downer Blasting Services, Underground mining, Otraco, the Snowden consulting business and our share in the RTL Mining and Earthworks joint venture.
Completion of the sale is expected to occur sometime before the end of 2021 calendar year.
About the Downer share price
Over the past 12 months, the Downer share price has pushed 35% higher, with year-to-date up 25%. It is worth noting that its shares are close to reaching the 52-week high of $6.87 achieved earlier this month.
Based on today's price, Downer commands a market capitalisation of around $4.66 billion and has approximately 696.1 million shares outstanding.
