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Croesus deal takes top gong

CORPORATE finance executives have nominated Croesus Mining’s purchase of Central Norseman Gold as WA’s top deal for 2002.

The $65 million Croesus-Great Central deal gained high praise from nearly every corporate finance executive surveyed by WA Business News.

Iluka Resources’ $130 million takeover of Basin Minerals and the $100 million merger of Perilya and Ranger Minerals also rated highly in the survey.

Prime Corporate finance director Liam Twigger described the Central Norseman acquisition as a “bold” move, following Croesus’ earlier acquisition of the Davyhurst gold mine.

“It meant that Croesus was utilising its balance sheet and cash reserves,” Mr Twigger said.

“Their market cap has grown, as has the stature of their management team led by managing director Mike Ivey.”

Hartley’s corporate finance director Richard Simpson agreed the Croesus deal was the “standout” transaction of the year.

The success of the merger is reflected in the strong growth in Croesus’ share price, from 29 cents at the time of the merger to about 85 cents currently.

Croesus also raised $12.5 million through the issue if $1 convertible notes and they are now worth close to $2.50.

“So in summary, Croesus has made some people very good money this year, Mr Simpson said.

Gresham Advisory Partners director Michael Ashforth advised Croesus on the acquisition.

“Mike Ivey and his team must get full credit for identifying the opportunity to create substantial value for Croesus shareholders and for having the confidence to put everything on the line to deliver that value,” Mr Ashforth said. 

“Where Gresham played a key role was in developing and implementing a structure that won WMC’s support and allowed Croesus, with a market cap of less than $30 million, to buy an asset worth $65 to $70 million.”

Gresham also advised Iluka on its successful takeover of Basin Minerals.

This deal combined the two companies’ projects in Victoria’s Murray Basin, considered the most prospective new mineral sands province anywhere in the world.

Iluka gained control of most of the assets identified in the Murray Basin and reinforced its position as market leader in the global rutile and zircon markets.

Earlier attempts by Iluka to lift its exposure to the Murray Basin, including an attempted takeover of Bemax, had not been successful.

Mr Ashforth attributed the success of the Basin Minerals deal to three things.

“First, a compelling value case and solid preparation – Iluka undertook about nine months of work before the deal was announced,” Mr Ashforth said. 

“Second, Gresham’s ability to assist Iluka and Basin reach agreement on all the issues needed to give the market confidence that the takeover would be successful. 

“Third, rapid implementation enabled the offer to be declared unconditional just three weeks after it opened.” 

In contrast, the Ranger-Perilya merger was one of the most challenging transactions completed last year.

It featured competing take-over offers, court challenges, regulatory intervention, capital raisings and corporate governance issues.

Not surprisingly, therefore, it was nominated as one of

the deals of the year by two of the law firms involved – Clayton Utz and Blake Dawson Waldron.

The merger proceeded in challenging circumstances, since Ranger was the subject of a hostile takeover bid by Revesco.

It involved unusual corporate governance issues, since the chairman of Ranger was also chairman of Revesco.

To further complicate matters, Perilya was in the process of buying the Broken Hill Zinc project from Pasminco.

Clayton Utz partner Mark Paganin, who advised Ranger, said it was unusual for a company to be defending a take-over and negotiating a merger at the same time.

The transaction also led to a precedent setting ruling by the Takeovers Panel.

Ranger successfully applied to the Takeover Panel for orders that required Ranger shareholders who had already accepted the Revesco offer to cancel those acceptances. This constituted a major setback for Revesco.

Mr Paganin said this was the first time the Takeovers Panel had issued this type of order.

Paterson Ord Minnett analyst Rob Brierley said the merger had strengthened Perilya’s balance sheet considerably, as it continued to ramp up to full production at Broken Hill.

Mr Paganin said Home Building Society’s demutualisation and $12 million IPO was another transaction that set a precedent.

It was the first time that the ASX had granted a waiver to allow the retention of A-class shares, which are held by directors and senior management and have greater voting power than ordinary Home shares.

The waiver is in place for four years from the date of listing and effectively provides a form of takeover protection during this period.

Home’s IPO, lead managed by Paterson Ord Minnett, was heavily oversubscribed.

It has provided big gains for investors, as the shares were issued at $1 and are currently trading at $3.20.

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