08/04/2009 - 10:43

Griffin drops takeover of Magellan

08/04/2009 - 10:43


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The parent company of WA lead miner Magellan Metals has taken steps to clarify misleading statements by Griffin Mining, which has dropped its proposal to acquire the Canadian company.

The parent company of WA lead miner Magellan Metals has taken steps to clarify misleading statements by Griffin Mining, which has dropped its proposal to acquire the Canadian company.

Last month Griffin, chaired by Perth-based Mladen Ninkov, proposed a $31 million cash offer for all of Ivernia's shares.

However earlier this month, Griffin dropped its proposal following actions undertaken by Ivernia that would have resulted in the "current and future control" of the company delivered to a related party.

Griffin's gripe centred on the alteration of terms of Ivernia's convertible notes, which it said was issued to the company's largest shareholder Sentient Global Resources Fund.

In a statement, Ivernia clarified Griffin's "misleading statements", saying Sentient was not the only buyer of the notes, and that the shareholder's stake in the company had been diluted.

Ivernia has been facing financial hardship, which was triggered production halt placed on the Wiluna lead mine in WA in April 2007 as a result of lead contamination issues in Esperance.


Ivernia's announcement is below:


Ivernia Inc. (TSX: IVW) ("Ivernia" or the "Company") today provided further information related to the Griffin Mining Limited ("Griffin") press release issued April 3, 2009 indicating Griffin has withdrawn its proposed unsolicited take-over bid for all of the shares of Ivernia.

Certain of the statements made by Griffin in its press release are false, incorrect or misleading. In particular, Sentient Global Resource Fund II's ("Sentient") fully diluted position was reduced to 38.1% upon the sale of US$5 million of Ivernia's secured convertible notes (the "Notes") to OppenheimerFunds Inc. announced by Ivernia on March 30, 2009, and may be further reduced to 34.9% if the Company is successful in completing the issue of the remaining US$5 million of Notes as disclosed by Ivernia. Sentient has not, as Griffin suggests, become "effectively entrenched" as a controlling shareholder.

The Griffin press release implies that Sentient was the only purchaser of the Notes. In fact, as Ivernia has disclosed, two other existing shareholders - Ingalls & Snyder and OppenheimerFunds Inc. participated in the refinancing and hold US$11.5 million and US$5 million of Notes, respectively. Sentient holds US$16.9 million of Notes.

Ivernia's refinancing was approved by a fully independent committee of directors, none of whom, as Griffin implies, are Sentient nominees.

The terms of the Notes were heavily negotiated, and the conversion feature was above the market price of Ivernia's shares at the time it was agreed to. Far from containing a "death spiral" conversion feature the conversion price is fixed, with standard anti-dilutive provisions, with certain other conversion reset provisions that existed under the prior Note terms and are unchanged under the modification and extension.

The Toronto Stock Exchange ("TSX") approved the Company's financial hardship application well before Griffin's press release of March 24, 2009 stating that it proposed making an offer for Ivernia shares. Ivernia only learned of Griffin's intention to make the offer as a result of Griffin's press release, dated March 24, 2009. Statements such as, "Griffin had advised of its intention to make an offer to purchase", or implications that the TSX approved the application in the face of the Griffin offer are simply untrue.

Further, the "separate unconditional offer" which Griffin refers to would have had the effect of handing over majority control of the Company to Griffin without any offer being made for any of Ivernia's outstanding shares. To accept Griffin's second proposal would have been contrary to the fiduciary responsibilities of Ivernia's management and board of directors.

Alan De'ath, Ivernia President and Chief Executive Officer said, "To our shareholders, we would like to say thank you for your support throughout this process. We are confident that the large majority of our shareholders, based on recent feedback, see through Griffin's attempts at opportunistically impugning a financing process that was well underway in order to further an individual agenda. With this financing now largely complete, Ivernia is on a solid financial footing, and can now focus squarely on planning for the restart of the Magellan Mine." RBC Capital Markets and Stikeman Elliott are Ivernia's financial and legal advisors, respectively.


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