Pilbara closes in on Altura lithium buy
Pilbara Minerals has all but locked in the acquisition of Altura Mining’s Pilbara lithium project.
Pilbara Minerals has all but locked in the acquisition of Altura Mining’s Pilbara lithium project, after securing the support of the failed miner’s lenders for the $US175m ($245m) acquisition of Altura’s West Australian assets, as Altura’s former directors fight a rearguard action to save the company from collapse.
Pilbara said it had agreed with Altura’s secured lenders, who put the company into receivership on Monday, to buy the holding company that controls Altura’s Pilbara mine.
The $US175m cost, which includes $US20m in share-based deferred payments, will be funded through a $240m raising already underwritten by AustralianSuper and Resource Capital Funds, to be completed when the deal is finalised.
Under the agreement, Pilbara Minerals will acquire Altura’s operating subsidiary that owns the mine and the processing plant, with the lending group already having agreed to vote in favour of the offer when a deed of company arrangement is put to lenders at a meeting likely to be held in early December.
But while Pilbara Minerals managing director Ken Brinsden said the company had won the right to match any alternative offer for Altura’s assets, the failed company’s former directors are still fighting a rearguard action to prevent the sale, with its corporate advisers again offering to recapitalise the ailing lithium producer on Wednesday.
Altura was nearing the launch of a $200m raising, led by Canaccord Genuity and Perth’s Azure Capital, when Altura’s lending group — including Castlelake, CarVal, Nomura and Clearwater Capital — called in KordaMentha as receivers on Monday, appointing voluntary administrators at the same time.
Canaccord and Azure wrote to KordaMentha on Wednesday offering to recapitalise the struggling miner and repay its lenders, who are owed about $250m, “in full” as an alternative to the sale of Altura’s assets.
It is understood the formal proposal, which was due to be delivered by the close of business on Wednesday, would include an offer by Canaccord to underwrite the raising.
The raising is believed to be backed with a cornerstone investment offer of about $60m to $70m with Altura’s major customer, China’s Ganfeng Lithium.
The letter was sent after Pilbara Minerals called a trading halt on Wednesday, ahead of an announcement of the acquisition.
The two operations have long been seen by the market as an obvious merger opportunity, but Pilbara Minerals’ interest in buying the asset from Altura’s receivers has sparked a bitter war behind the scenes.
The renewed recapitalisation offer means KordaMentha receivers Richard Tucker and John Bumbak will need to carefully weigh whether it represents better value for the lending group than Pilbara’s offer, believed to be just shy of the total amount owed to the US hedge funds.
KordaMentha is expected to run a formal process to market the operating subsidiary and its assets over the next five weeks, as a market-sounding process to test its value.
But it is understood that Altura directors have also written to KordaMentha, threatening legal action if due consideration is not given to the recapitalisation — which would also preserve at least some value for the company’s 13,000 shareholders, and keep the mine operating while the issue is sorted out.
Legal threats are believed to be flying thick and fast behind the scenes, with Altura’s former board believed to have accused their near neighbours of breaching confidentiality agreements covering access to Altura’s data room that they say should have prevented Pilbara Minerals from approaching its lending group directly with an offer to buy its debt.
Mr Brinsden told The Australian Pilbara Minerals had been closely monitoring Altura’s struggles over the past year, and had offered what it believed the assets were worth, but denied breaching any confidentiality agreements.
The deal to buy the assets will leave Altura’s 13,000 shareholders out in the cold, and means trade creditors — believed to be owed $20m to $30m by Altura — would also likely be left empty-handed, unless administrators Cor Cordis can realise some value from the limited assets left in Altura’s corporate shell.
Mining services supplier NRW Holdings said it was owed $9m by Altura, and is believed to be the largest trade creditor.
Pilbara Minerals shares last changed hands for 39c.