22/11/2007 - 15:21

Ellendale Resources to be taken over by Great Gold Mines

22/11/2007 - 15:21

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Victoria-based Great Gold Mines NL will acquire Nedlands-based uranium explorer Ellendale Resources NL through a scrip issue, worth over $14 million, the companies have announced.

Ellendale Resources to be taken over by Great Gold Mines

Victoria-based Great Gold Mines NL will acquire Nedlands-based uranium explorer Ellendale Resources NL through a scrip issue, worth over $14 million, the companies have announced.

 

 

The full text of a joint company announcement is pasted below

Great Gold Mines NL (GNL) (ASX:GNL) and Ellendale Resources NL (ELL) (ASX:ELL) today announced their intention to implement 2 Schemes of arrangement (Schemes) under which GNL will acquire all of the issued capital and outstanding options in ELL.

Proposed Consideration

Under the Schemes, GNL will acquire all of the issued ordinary shares and issued options to acquire ordinary shares in ELL for the consideration of:

  1. 2.5 fully paid GNL ordinary shares for each fully paid ELL ordinary share; and
  2. 1.6 fully paid GNL ordinary shares for each ELL option to acquire an ELL ordinary share (ELL Option).

The proposal is subject to a number of pre-conditions (described below) that must be satisfied before the Schemes are implemented.

The Scheme for the acquisition of the ELL Options (Option Scheme) will be conditional on the implementation of the Scheme for the acquisition of the shares in ELL (Share Scheme). However, the Share Scheme will be able to be implemented (assuming all pre-conditions are satisfied or waived and all required approvals obtained) whether or not the Option Scheme is implemented.

Independent Expert

The Board of ELL will appoint an Independent Expert to consider the terms of the merger proposal.
Strategic Benefits

  • Exposure to diversified opportunities in uranium, nickel and copper.
  • Creation of an exploration and development group of sufficient size to attract additional management expertise.

Key Conditions

Implementation of the Share Scheme is subject to a number of conditions precedent including:

  • execution of a formal Merger Implementation Agreement between GNL and ELL
  • ELL shareholder approval of the Share Scheme
  • GNL shareholder approval of the Share Scheme
  • relevant regulatory approvals
  • no prescribed occurrences (as defined by section 652C of the Corporations Act)
  • no material transactions
  • no material adverse change (relating to the GNL and ELL businesses and financial positions)
  • GNL completing the capital raising previously advised to its shareholders to raise sufficient capital to fund its ongoing working capital requirements.

Implementation of the Option Scheme is subject to the same conditions precedent (with the exception that the approval of ELL optionholders, not shareholders, is required). In addition, the Option Scheme is subject to the implementation of the Share Scheme.

Break Fee

A party must pay the other party an amount of $100,000 if at any time before the Schemes are implemented (or the End Date):

  1. a competing takeover, Schemes or other proposal is announced and the bidder acquires a relevant interest in more than 50% of the party's shares and the proposal becomes unconditional;
  2. a third party acquires a relevant interest in more than 20% of the party's ordinary shares;
  3. a third party acquires or agrees with the party to acquire the whole or a substantial part of any one or more of the party's assets or businesses;
  4. any director of the party fails to make, or withdraws, a recommendation to vote in favour of the Schemes,other than as a result of an independent expert engaged by ELL opining that the relevant Scheme is not in the best interests of shareholders or optionholders (other than in circumstances where a superior proposal has been announced);
  5. any director of the party recommends a proposal or offer by a third party to acquire the shares of a party or a substantial part of its assets or business; or
  6. the other party terminates the agreement for the implementation of the Schemes for a material breach by the firstmentioned party that is not remedied.

Exclusivity Restrictions

During the period the agreements for the implementation of the Schemes are on foot each party must:

  1. No-shop: ensure that neither it nor any of its representatives take any actions with a view to obtaining an expression of interest or proposal from any person regarding a competing transaction;
  2. No-due diligence: not permit due diligence investigations on it or any of its subsidiaries, or make available to any other person information relating to it or its subsidiaries or any competing transaction;
  3. No-talk: ensure that neither it nor any of its representatives negotiates or enters into any negotiations or discussions with any person regarding a competing transaction; and
  4. No termination: ensure that neither it nor any of its representatives enters into any agreement giving the other pary the right to terminate the Transaction.

Despite these exclusivity restrictions, a party may respond to any unsolicited higher offer where it receives legal advice that failing to respond would be likely to breach the fiduciary or statutory duties of its directors. Should such an event occur, the party must notify the other party and provide it details unless it receives legal advice that to do so would be likely to breach fiduciary duties of it's directors.

ELL will provide GNL with all information it requests in connection with the Schemes which information will be subject to a Confidentiality Agreement.

Advisers

Minter Ellison is acting as legal counsel to ELL.
BBY is acting as corporate advisor to GNL.
Cornwall Stodart is acting as legal counsel to GNL.

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