20/10/2008 - 11:30

CBH rejects Perilya's risk claims

20/10/2008 - 11:30

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CBH Resources Ltd has hit back at claims that its proposed merger with Perth-based Perilya will expose the latter's shareholders to additional risks in relation to CBH's Endeavour mine and debt position.

CBH Resources Ltd has hit back at claims that its proposed merger with Perth-based Perilya will expose the latter's shareholders to additional risks in relation to CBH's Endeavour mine and debt position.

Earlier this month, Perilya chairman Patrick O'Connor said a merger is risky given the current volatility in global markets.

He said that the merger will expose Perilya stakeholders to CBH's high cash costs at Endeavour and some $200 million in debt.

Today CBH chairman Jim Wall said those concerns are "overstated".

"CBH has recently reported Endeavor's best operating performance in over two years
following implementation of a major new operating plan," Mr Wall said.

He added that the company's debt position is currently being reduced with buyback of some of its convertible notes.

On October 10, the company said it had bought back and cancelled 22,500 of its 195,190 convertible notes on issue, paying a quarter of the $1000 price tag for each note. CBH spent over $5.6 million on the acquisition.

"CBH's remaining convertible note debt does not fall due for repayment until 2012," Mr Wall said today.

The company today reiterated the compelling logic of a merger, which if successful, will combine the Broken Hill operations of both companies and deliver significant benefits to shareholders and position the combined group for sustainable growth.

CBH is proposing a two-tiered, all-scrip offer, which took into account Perilya's intention to sell its Mt Oxide copper project in Queensland to Perth stock Chalice Gold Mines Ltd.

CBH is offering 2.8 shares for each Perilya share, assuming the Mt Oxide transaction goes ahead, or 4.2 shares for every Perilya share if the sale of the copper project is not completed.

Earlier in the month, Perilya and Chalice signed formal agreements for the Mt Oxide transaction.

Perilya has advised that its shareholders take no action until directors have issued a target statement.

Shares in CBH were down 0.2 cents to 6.2 cents while shares in Perilya fell 4.5c to 19c at 14:33 AEDT.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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