A $5.1 million capital raising by Alto Metals has been delayed after its bidder Habrok Mining submitted an application to the Takeovers Panel.
A $5.1 million capital raising by Alto Metals has been delayed after its bidder Habrok Mining submitted an application to the Takeovers Panel, seeking a “declaration of unacceptable circumstances”.
Alto Metals yesterday launched a 1-for-4 rights issue priced at 7 cents after rejecting a takeover bid from Habrok, which had offered to buy the company for 6.6 cents per Alto share.
The deal today values Alto at around $17.6 million.
The company, which has also received takeover bids from China-owned Goldsea Australia Mining and Middle Island Resources, says persistent interest from third parties has inhibited its ability to raise capital due to “regulatory complexities”.
Alto said it would address this funding constraint with a capital raising; however, the Takeovers Panel today said Alto must defer the entitlement offer and not issue any new shares without approval from the panel.
In its submission, Habrok said Alto had sought to stymie the takeover bid by increasing the controlling position of its shareholder Windsong Valley.
Habrok also said the raising operated as an “unacceptable lock-up device”, meaning Habrok would need to increase its offer price if it wished to participate in the raising.
Habrok said these “circumstances operate to coerce or rush Alto shareholders into selling their shares on-market, participating in the entitlement offer and/or rejecting the Habrok bid on an uninformed basis”.
Welshpool-based Habrok has sought interim orders to restrain Alto from offering and accepting subscriptions, and long-term orders including termination of the entitlement offer.
Alto said it had already received $2.6 million in commitments under the capital raising, including $1.7 million worth of acceptances under the institutional component of the offer.
Although now closed, the offer will not be settled unless approved by the Takeovers Panel.
The retail component of the offer was due to open July 20 but is expected to be delayed, Alto said.
The company says it “strongly disagrees with the application made by Habrok and intends on vigorously defending the application with a view to proceeding with the entitlement offer”, which is being managed by Morgans Financial.
Alto has maintained shareholders should reject the Habrok offer, with further information to be provided in an upcoming target’s statement.
West Perth-based Alto is looking to develop its 6.3 million tonne Sandstone gold project in the East Murchison region of Western Australia.