13/11/2007 - 15:40

Golden West rejects Fairstar plan

13/11/2007 - 15:40

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Osborne Park-based Golden West Resources Ltd has rejected the all scrip takeover offer made by Fairstar Resources Ltd, saying that the bid was inadequate and provided no prospect of faster progress on the development of the Wiluna West iron ore project.

Golden West rejects Fairstar plan

Osborne Park-based Golden West Resources Ltd has rejected the all scrip takeover offer made by Fairstar Resources Ltd, saying that the bid was inadequate and provided no prospect of faster progress on the development of the Wiluna West iron ore project.

Golden West, which has a market capitalisation almost five times that of Fairstar, has received written commitments from shareholders representing 22.6 per cent of issued capital supporting a decision to refuse the offer, of five Fairstar shares for every one Golden West share.

For its part, Fairstar today announced an underwriting agreement with Findlay & Co Stockbrokers Pty Ltd whereby the firm would underwrite a placement to raise either $10 or $25 million, to fund the transaction and other costs associated with the company's bid.

 

 

The full text of a Golden West announcement is pasted below

Golden West Resources Limited (Golden West) advises shareholders to REJECT outright the all scrip takeover offer for the Company from Fairstar Resources Limited.

After careful consideration, the Golden West Board has rejected the proposal as not being in the best interests of shareholders.

Golden West has to date received written commitments from shareholders representing 22.6% of the Company's shares supporting the decision to REJECT the offer.

Golden West also urges shareholders to vote in favour of the issue of new securities at the Company's upcoming Annual General Meeting, to be held on 29 November 2007, to assist with the fast track development of the Wiluna West Iron Ore Project.

Golden West is convinced the Fairstar offer is inadequate and provides no prospect of faster progress on the development of the Wiluna West iron ore project.

As previously stated, Golden West believes the Fairstar offer:

  • Undervalues your Company
  • Will significantly dilute shareholders' interests in the Wiluna West Iron Ore Project
  • Provides no access to any other substantial assets
  • Fails to provide any increased technical and management capability within the combined entity
  • Will not provide Golden West Shareholders with increased liquidity for their shares and
  • Has no meaningful cost synergies.

Golden West shareholders would fully appreciate the progress the Company has achieved to date. Through the identification and exploration of the Wiluna West Iron Ore Project, Golden West has appreciated in market value capitalisation from $10 million to approximately $170 million.

The current resource drilling campaign has increased Golden West's Inferred Mineral Resource to 86.3 million tonnes at 60.1% Fe. Golden West believes there is still significant potential value to be identified at Wiluna West and expects to increase the company's Inferred Mineral Resource and transition to a significant iron ore producer.

With written committments from shareholders representing 22.6% of shares in Golden West indicating they will NOT ACCEPT the current bid from Fairstar, scrip-for-scrip capital gains tax rollover relief will not be available to Golden West Shareholders who accept this bid as the offer will fail to meet the 80% minimum acceptance threshold required for scrip-for-scrip capital gains tax roll over relief to be available.

The issues of corporate value and personal tax consequences have both encouraged the Board of Golden West to instruct shareholders at this early stage to REJECT the offer from Fairstar.

The takeover bid by Fairstar has required Golden West to commit significant resources, both human and monetary, to responding to the bid, a significant potential distraction from the core activity of advancing the Wiluna West Project.

Golden West has progressed the development of the Wiluna West Project as rapidly as possible. Continuing the development schedule will require additional capital to accelerate drilling activities, commence feasibility studies and develop the Company's Project.

This development program is in the interests of all Shareholders and therefore Golden West urges all Shareholders to vote in favour of Resolution 3 to approve the issue of securities at the upcoming Annual General Meeting to be held at the Sheraton Perth Hotel on Thursday 29 November 2007.

 

 

The full text of a Fairstar announcement is pasted below

In accordance with Listing Rule 3.10.3, Fairstar Resources Limited (Fairstar) announces that it has entered into an agreement with Findlay & Co Stockbrokers (Underwriters) Pty Ltd (Findlays) whereby Findlays will underwrite a placement of Fairstar shares to institutional and professional investors to fund the transaction and other costs associated with Fairstar's current takeover bid for Golden West Resources Limited (GWR).

The agreement contemplates that the placement will raise $10 million (if the GWR bid becomes unconditional and Fairstar acquires less than 90% of GWR) or $25 million (if the bid becomes unconditional and Fairstar acquires more than 90% of GWR), in either case at a price per Fairstar share equal to the lower of $0.50 or 80% of the market price of Fairstar shares at the time the placement is made. In both cases the amount to be raised will be net of the underwriting fee referred to below.

Findlays will receive an underwriting fee of 6% of the amount raised and will be entitled to reimbursement of its reasonable expenses. It will also receive an administration fee of $100,000 if the placement does not proceed.

Findlays' underwriting commitment is subject to standard termination events, including a 5% fall in the S&P ASX 200 Index, the outbreak of war, force majeure, a material adverse change in Fairstar's assets or liabilities, Fairstar's insolvency, or a breach by Fairstar of the representations and warranties given by it under the agreement. Findlays can also terminate its underwriting commitment if the GWR bid has not become unconditional within three months.

At this stage, Fairstar anticipates that the placement will not require shareholder approval.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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