The Downer EDI Limited (ASX: DOW) share price is edging higher on Friday afternoon. This comes after the company announced an update on the divestment of its Open Cut Mining East business.
At the time of writing, the integrated services company's shares are 1.45% higher to $5.97.
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Downer concludes divestment
In its release, Downer advised it has completed the sale of its Open Cut Mining East business to 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 in the immediate future.
The transaction includes the transfer of the assets, liabilities, employees and all existing contracts.
This is Downer's last step in exiting its capital-intensive mining businesses. The divestment includes the Open Cut Mining West, Downer Blasting Services, Underground mining, Otraco, the Snowden consulting business and the RTL Mining and Earthworks joint venture.
Together, the total proceeds from the company's divestment program amount to $778 million.
It appears that the additional cash injection has rallied investors, having a positive effect on the Downer share price.
About the Downer share price
Over the past 12 months, the Downer share price has gained 11% with year-to-date around 12% in the green. Interestingly, the company's shares fell from their 52-week high of $6.87 in October after announcing the sale of the Open Cut Mining East business.
Based on today's price, Downer commands a market capitalisation of around $4.09 billion and has approximately 685.62 million shares outstanding.
