13/09/2007 - 10:21

ConsMin recommends Palmary offer

13/09/2007 - 10:21

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The board of Consolidated Minerals Ltd has recommended its shareholders accept an increased $4.50 per share offer from Ukraine-based Palmary Enterprises Ltd, turning its back on Brian Gilbertson's Pallinghurst Resources Australia Ltd.

ConsMin recommends Palmary offer

The board of Consolidated Minerals Ltd has recommended its shareholders accept an increased $4.50 per share offer from Ukraine-based Palmary Enterprises Ltd, turning its back on Brian Gilbertson's Pallinghurst Resources Australia Ltd.

Palmary announced last night it would increase its cash takeover offer to $4.50 per ConsMin share, up from the $4.10-a-share offer lodged by Pallinghurst.

The Ukrainian-backed Palmary said the improved offer would only stand if the company received unanimous support from the ConsMin board by 1200 AEST today.

ConsMin said in an announcement that it was unclear how Pallinghurst would match any increased offer, as it had promised to do, or in fact whether the Palmary offer met the criteria for the increase.

"The Board of ConsMin recommends that ConsMin shareholders do not accept the Pallinghurst offer pending receipt of a bidder's statement from Palmary in relation to the increased Palmary Offer," it said.

Palmary has confirmed it can fully fund the increased offer price, and otherwise the offer remains subject to the conditions previously set out.

 


The full text of a Consolidated Minerals announcement is pasted below

Consolidated Minerals Limited (ASX: CSM, AIM: CNM, FSE: CMN) announces that:

  • the directors of CSM welcome the announcement by Palmary Enterprises Limited (Palmary) of its intention to increase its conditional all-cash off-market takeover offer for all shares in CSM from $3.95 to $4.50 per CSM share (Increased Palmary Offer) and unanimously recommend that the Increased Palmary Offer is in the interests of CSM and its shareholders in the absence of a superior proposal; and
  • CSM accordingly withdraws its recommendation for the all-cash off-market takeover offer from the Pallinghurst Consortium (Pallinghurst) of $4.10 for each CSM share (as described in Pallinghurst's announcement dated 6 September 2007) (Pallinghurst Offer).

The Board of CSM recommends that CSM shareholders do not accept the Pallinghurst Offer pending receipt of a Bidder's Statement from Palmary in relation to the Increased Palmary Offer.

The Increased Palmary Offer

The announcement by Palmary dated 12 September 2007 (a copy of which is attached to this announcement) (Palmary Announcement) advised that Palmary intends to increase its cash takeover offer for CSM from $3.95 per CSM share to $4.50 per CSM share.

The Palmary Offer represents a 9.8% per cent premium to the value of the Pallinghurst Offer of $4.10. CSM recognises that, in its announcement of 6 September 2007 (and in its subsequent announcement of 13 September 2007), Pallinghurst stated its intention to further vary its $4.10 offer to provide CSM shareholders with a potential top-up payment which would involve Pallinghurst making an additional cash payment to CSM shareholders who have accepted the Pallinghurst Offer in order to 'match' the offer price for CSM shares under any subsequent higher off-market takeover offer (such as the Increased Palmary Offer).

CSM does however note that Pallinghurst has not yet released a supplementary bidder's statement or a notice of variation in relation to the top-up payment mechanism and that, accordingly, CSM remains unclear on the detailed terms of the top-up payment proposed by Pallinghurst. CSM also notes that in its announcement of 6 September 2007, Pallinghurst advised that the top-up payment would be paid if any alternative higher offer met certain criteria (including, without limitation, that the alternative higher offer becomes unconditional by 18 October 2007). There is no guarantee that all of the criteria outlined by Pallinghurst in its announcement of 6 September 2007 for the making of the top-up payment will be satisfied. This absence of clarity on the terms of the top-up payment mechanism and the uncertainty regarding whether or not the criteria specified to date by Pallinghurst for the making of the top-up payment will be satisfied has led the board of CSM to conclude that the Increased Palmary Offer is superior to the Pallinghurst Offer notwithstanding Pallinghurst's top-up payment proposal.

CSM notes that the Increased Palmary Offer is for $4.50 cash and that Palmary has confirmed that it has the ability to fully fund the increased offer price.

CSM further notes that the Increased Palmary Offer remains subject to the conditions detailed in the announcement of the original Palmary offer of $3.95 cash per CSM share on 31 August 2007. Your directors remain of the view that, in the absence of a superior proposal, the conditions to the Palmary Offer either will be satisfied, waived or are within the control of CSM.

The Palmary Announcement provides that, as part of the Increased Palmary Offer, Palmary is requiring CSM to enter into arrangements with Palmary in respect of a break fee based on terms similar to those agreed with Pallinghurst in relation to the Pallinghurst Offer (as disclosed by CSM in its announcement of 6 September 2007). The break fee arrangement with Palmary will be calculated on the basis of 1% of CSM's equity value using a price of $4.50 per CSM share. It is the intention of CSM to enter into discussions with Palmary to agree break fee arrangements of the nature contemplated in the Palmary Announcement by the deadline prescribed by Palmary.

Palmary will provide further details in relation to the Increased Palmary Offer and the intentions of Palmary in relation to CSM in Palmary's Bidder's Statement that is scheduled to be dispatched to CSM shareholders by the end of October. CSM's Target's Statement in response to the Increased Palmary Offer will be dispatched to CSM shareholders shortly after receipt of the Palmary Bidder's Statement and will outline the reasons for your Director's recommendation in relation to the Increased Palmary Offer.

Withdrawal of recommendation for the Pallinghurst Offer

The Board of CSM is withdrawing its recommendation for the Pallinghurst Offer as the Board unanimously considers that the Increased Palmary Offer is a superior offer to the Pallinghurst Offer for the reasons outlined above.

CSM notes that, as outlined in CSM's announcement of 6 September 2007, CSM has agreed to pay a break fee of $10.84 million to Pallinghurst if, among other circumstances, the board of CSM withdraws its recommendation of the Pallinghurst Offer (subject to certain exceptions).

CSM will, as soon as practicable, issue to CSM shareholders a Supplementary Target's Statement in relation to the Pallinghurst Offer supplementing its Target's Statement dated 14 August 2007. In the meantime, the Board of CSM recommends that CSM shareholders do not accept the Pallinghurst Offer.

Continued recommendation of rejection of the Territory Resources Limited (Territory) Offer

The Board of CSM continues to recommend that CSM shareholders do not accept the Territory Offer as the Board unanimously considers that the Increased Palmary Offer is a superior offer to the Territory Offer.

CSM will, in due course, issue to CSM shareholders a Target's Statement in relation to the Territory Offer. In the meantime, the Board of CSM continues to recommend that CSM shareholders do not accept the Territory Offer.

Summary of CSM Board's Recommendation

The CSM Board unanimously recommends that CSM shareholders do not accept the Pallinghurst Offer or the Territory Offer pending receipt of the Bidder's Statement from Palmary in relation to the Increased Palmary Offer.

The Board of CSM will continue to keep the market informed of further developments.

CSM is being advised by JPMorgan and Blake Dawson Waldron.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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