LionOre Mining International last week made its first steps towards moving from a public company by announcing its intentions to de-list from the Australian Stock Exchange (ASX), just a week after its suitor, Xstrata said it had made a cash offer of US $ 4 billion, or P 25.8 billion.
In a statement posted on its website on Wednesday, the company said it was looking at exiting the ASX by June 5 this year and added that it is establishing a share sale facility for its Australian investors.
The Botswana, Toronto and Australian stock exchanges listed company with operations in Australia, Botswana and South Africa has become a target for acquisition following its trail-blazing technology dubbed Activox and some good finds in Botswana.
?The company has decided to delay providing the Australian with the details of the share sale facility,? said a statement posted on its website. ?This will allow LionOre to fully consider the impact, if any, of the offer on LionOre?s proposed delisting from the Australian Stock Exchange and the share sale facility.?
At the end of last month, the multi-listed company announced that it ?entered into a support agreement? for an all cash to acquire all the issued and outstanding shares of LionOre by way of friendly take-over bids.
The offer was placed at 18.50 Canadian dollars per share, valuing the transaction at US $ 4 billion representing 5.8 percent premium of 17.49 Canadian dollar which was the closing price per LionOre share at Monday close.
The proposal by Xstrata Plc ? the London-Swiss listed company ? was backed by the LionOre board who urged investors to accept it but a renowned resource analyst here said if the offer was accepted, LionOre would have to delist. However, it is not yet clear whether Xstrata will list on the BSE.
?We are waiting to see what will happen. If the bid is being supported by shareholders, we are definitely going to see LionOre being de-listed from the Botswana Stock Exchange,? Leutwetse Tumelo of Capital Securities which is also acting as the sponsoring broker for LionOre said last week. ?But the big question is whether Xstrata Plc, if it takes it, will list on the BSE. Politically, it will be nice to see Xstrata listing on the BSE because top fund managers in Botswana have invested heavily in LionOre.?
However, the Botswana government was unnerved by the developments saying that it was not considering selling its shares in LionOre operations in the country. The government holds a 15 percent share in its joint venture with LionOre at Tati Nickel mine and they are also involved in a complex cross shareholding structure at BCL. At BCL, both government and LionOre, have a stake in BRST the holding company that owns BCL mine. Chartered Company has 1.4 percent, LionOre has a further 6.3 percent and GRB (Government of the Republic of Botswana) has a further 7.5 percent.
The bid will mean that LionOre will sell its interest in all its operations in Botswana, Australia and South Africa?where they own 50 percent of the Nkomati mine.
Praising the bid, LionOre President and Chief Executive Officer, Colin Steyn, said: ?We are very pleased to support this offer. The bid offers clear value to shareholders, and also positions our operations and employees as part of growing, successful global nickel producer. This is an extremely attractive opportunity for our shareholders to lock in the substantial growth in value they have seen recently in their investment. To realize cash at this point in the commodity cycle eliminates the risk that our shareholders would remain exposed to as a stand-alone group and enables them to realize value for their investment at a time of historically high nickel prices.?
Ian Pearce, Chief Executive Officer of Xstrata said, ?The combination of LionOre with Xstrata Nickel brings together two very complimentary businesses and creates a significant opportunity for enlarged Xstrata businesses. This is an important step in our strategy to grow Xstrata Nickel into a global nickel business.?
According to the envisaged taker-over, the bid will be financed through cash and debt.