Toronto listed resource group LionOre Mining International has announced a cash takeover offer of 85 cents a share for all the shares it does not already hold in its 80% owned Australian listed subsidiary, LionOre Australia (Nickel). The offer is made by LIM's wholly owned subsidiary, LionOre Australia.
LionOre Nickel's second largest shareholder, Golden Arrow Fund, has agreed to grant LionOre Australia an option to acquire up to 3m of its LionOre Nickel shares, representing approximately half of its total holding, at the bid price. The option brings LIM's total interest in LionOre Nickel to 82.3%.
LionOre Australia's managing director, Mark Ashley, said the takeover offer was designed to consolidate the ownership of LIM's Australian nickel interests and to address the increasing lack of liquidity in LionOre Nickel shares.
Ashley said the offer price represented full and fair value for LionOre Nickel shares, exceeding the highest price at which the stock had ever traded on the Australian Stock Exchange since the company listed in April 1999. It also represented a premium of 31% over the average sale price of LionOre Nickel shares for the preceding 60 days.
"The lack of liquidity in LionOre Nickel shares is illustrated by the fact that less than 2% of the company's shares have traded over the past 60 days," Ashley said. "Under the current circumstances, we believe the market for LionOre Nickel shares can only become progressively less liquid - a situation which will not benefit minority shareholders.
"This cash offer represents an opportunity for minority shareholders to realise an immediate return on their investment at a historically high price without incurring the usual transaction costs," he added.
"From LIM's point of view, the consolidation of 100% ownership of the Lake Johnston nickel assets fits with the group's strategy as a growing multi-mine nickel sulphide producer in Australia and Africa," Ashley said.
The offer is conditional on approval by the Foreign Investment Review Board, a funding facility from NM Rothschild & Sons (Australia), LionOre Australia reaching the compulsory acquisition threshold, and the usual prescribed occurrences.
Ashley said he would accept the offer for his own LionOre Nickel shares. However, as managing director of both LionOre Australia and LionOre Nickel, he and fellow directors Peter Buck and Don Bailey would not participate in LionOre Nickel's deliberations on the offer or the ultimate recommendation of its board to shareholders.
Ernst & Young Corporate Finance is advising LIM on the takeover offer.