The bidding war for African Copper this week took another turn when Natasa Mining Ltd warned that should shareholders of the troubled mining outfit decide otherwise at the planned EGM, they risk losing their investments.
“The directors of Natasa wish to highlight that should shareholders of African Copper plc vote against the resolutions to be put to them at the EGM to be held on 7 May 2009, there is a strong possibility that a liquidator would be appointed to Messina Copper (Botswana) (Proprietary) Limited, with the result it would be unlikely that there will be any returns to African Copper shareholders,” said Natasa on its website.
The warning follows last week’s unsolicited and tantalising US$22.5 million offer from Zambia Copper Investments Ltd (ZCI) to African Copper that rivals the one from Natasa.
“In Natasa’s view, the ZCI conditional offer is incapable of being executed under its present proposed terms,” it added.
Based on the closing share price of 20 April, the proposed ZCI offer provides to the bondholders a return with a value of only 65% of the value of the Natasa agreed transaction.
In Natasa’s view, it is inevitable that bondholders, even if they are prepared to entertain the ZCI proposal, will require from ZCI a significant improvement in the terms offered to them by ZCI.
This improvement is likely to be derived from a dilution of the existing shareholders’ equity of the African Copper Group.
Natasa argues that there exist binding agreements with African Copper and both the bondholders and the larger creditors of African Copper, which will be implemented immediately following a vote in favour of the main resolution at the EGM.
On the other hand, Natasa says the ZCI US$2.5 million bridge loan is insufficient to cover the level of African Copper’s indebtedness to Natasa, which will become due and payable immediately if African Copper shareholders resolve not to approve the resolutions.
“It is clearly misleading for ZCI to state that there is no significant risk to completion compared to the Natasa Offer,” stated Natasa.
“We wish to confirm that Natasa is committed to investing sufficient sums to see African Copper’s Mowana mine move into commercial production. The US$15 million investment provided under our agreed transaction represents Natasa’s minimum commitment and a comparison with ZCI’s proposed US$22.5 million investment is therefore meaningless”, it added.
Last week, ZCI, the Johannesburg Stock Exchange (JSE) and Euronext (Paris) listed company said its offer was better than that of Natasa it was not subject to additional due diligence.
The ZCI Chairman, Tom Kamwendo, said this really is a deal in everyone’s interest where all parties can work together to create value.
“The immediate availability of bridge financing to repay the Natasa bridge loan, the improved package for all stakeholders and the greater long-term investment in African Copper means that we are certain that the board of African Copper should be doing all that it can to make this deal available to African Copper creditors and shareholders,” said Kamwendo.
ZCI said its offer would return significantly more cash (approximately US$8.8 million in total) to both bondholders and trade creditors and allows bondholders to retain a proportion of their bonds (US$2.5 million) giving an aggregate cash and bond offer of approximately US$11.3 million versus Natasa’s US$5.9 million.
