22/10/2008 - 10:07

Aviva to merge with Canadian company

22/10/2008 - 10:07

Bookmark

Save articles for future reference.

Perth-based energy group Aviva Corp Ltd has agreed to a $22 million merger with Canadian coal producer NEMI Northern Energy and Mining Inc.

Perth-based energy group Aviva Corp Ltd has agreed to a $22 million merger with Canadian coal producer NEMI Northern Energy and Mining Inc.

The companies today unveiled a "merger of equals", which will combine the Peace River metallurgical coal mine, partly held by NEMI, with Aviva's proposed $1 billion Coolimba power station in WA and the Mmamantswe coal project in Botswana.

"We believe we will be positioned as a leading growth-oriented coal and energy producer with a global mandate, an outstanding inventory of coal resources, key top-tier partners and managerial and technical skills to drive future growth," NEMI chief executive Pat Devlin said.

Toronto-listed NEMI will acquire all the issued share of Aviva through a scheme of arrangement, with shareholders to receive 0.59 NEMI shares - in the form of CHESS Depository Interests - for each Aviva share.

The merged group will maintain its primary listing on the Toronto Stock Exchange and will apply for a listing on the Australian Securities Exchange and the Botswana Stock Exchange.

"Through this combination we expect to accelerate growth and capitalise on the strength of each business in the development of both metallurgical and thermal coal deposits," Aviva chief executive Lindsay Reed said.

The two companies began discussions prior to the turmoil in global markets and Mr Reed said the financial crisis had strengthened the rationale behind the merger.

"The merger always made sense from the first time we sat down and it makes even more sense now," he told reporters on a conference call.

Mr Reed said the merged outfit's strong balance sheet and future cashflows could fund its short term commitments at Peak River and future medium term project developments in WA and Africa.

The merged outfit will have combined cash of $C25 million ($A30.5 million).

The president and chief executive role of the combined company will be filled by Mr Reed while Mr Devlin will become executive chairman.

Aviva shares closed steady at 25 cents.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options