Silvercorp hopes to secure OreCorp with restructured $276m takeover bid
The Canadian miner’s new takeover offer comes with a lower acceptance condition, meaning it can get around Perseus Mining’s blocking stake.
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Canadian miner Silvercorp Metals hopes to finally secure ASX-listed OreCorp with a restructured $276m takeover offer in a bid to get around Perseus Mining’s blocking stake.
Faced with the potential defeat of its already sweetened bid, Silvercorp has returned with an agreed off-market takeover proposal that has the same cash and scrip offer but only requires the miner getting at least 50.1 per cent of the target.
OreCorp chief executive Henk Diederichs said the new proposal, backed by the board of the Tanzanian gold developer, provided shareholders with a level of certainty.
“It became clear in recent weeks that the proposed scheme was at risk of not proceeding to completion,” Mr Diederichs said on Wednesday.
“We believe this would have prevented OreCorp shareholders having the opportunity to receive a significant premium on their OreCorp shares and exposure to a company that is geographically diverse, with a strong balance sheet and solid mine building and operational experience.”
Silvercorp, which owns 15.74 per cent of OreCorp, also acknowledged the previous deal was at risk of failing after Perseus acquired a 19.9 per cent strategic stake in the target in late November and planned to vote against the scheme.
Rather than requiring at least 75 per cent of the votes cast at a shareholder meeting to approve the now-dropped scheme, the Silvercorp off-market offer only needs a 50.1 per cent minimum acceptance.
Silvercorp chairman and chief executive Rui Feng blamed “outside interference” for putting the previous deal at risk.
“We are pleased to adjust our transaction with OreCorp after it became clear that the previously proposed scheme, due to outside interference, was at risk of not completing,” Dr Feng said.
He said the off-market offer was subject to a “very limited number of conditions”.
“Silvercorp obtained the required approval of the Tanzania Fair Competition Commission approximately two months after the application was submitted,” Dr Feng said.
“Even if an alternative proposal is made, there is uncertainty as to whether it would be successful in receiving similar FCC approval.
“Accordingly, our offer provides OreCorp shareholders with the opportunity to receive the consideration in a timely manner.”
The Silvercorp cash and scrip offer has an implied value of 58.9c a OreCorp share, valuing the gold developer at $276.5m.
OreCorp shares jumped after Wednesday’s revised bid, and closed up almost 13 per cent at 57.5c in a higher market.
The OreCorp board unanimously recommended shareholders accept the Silvercorp offer in the absence of a superior proposal, and subject to an independent expert’s report concluding the bid was reasonable to shareholders.
The board said they intended to accept the offer for the 3.94 per cent of the company’s shares they collectively hold.
Based in Western Australia, OreCorp’s key project is the Nyanzaga Gold Project in northwest Tanzania.
Silvercorp said the company was well positioned to fund and immediately move to advance Nyanzaga towards commercial production.
Silvercorp and OreCorp originally reached an agreement in August to create a $US630m ($922m) diversified precious metals company.
The companies then agreed in November to increase the cash component to 19c per OreCorp share from 15c, while retaining the scrip consideration at 0.0967 Silvercorp shares.
A shareholder vote scheduled for December 8 was postponed after Perseus acquired its stake, with the rescheduled January 18 meeting to be cancelled after OreCorp and Silvercorp agreed to terminate the scheme implementation deed.
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Originally published as Silvercorp hopes to secure OreCorp with restructured $276m takeover bid