04/11/2019 - 10:30

IGO launches $312m Panoramic takeover

04/11/2019 - 10:30


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Independence Group is planning to take advantage of nickel miner Panoramic Resources’ operational issues and boardroom changes by launching a hostile scrip takeover bid.

IGO launches $312m Panoramic takeover
Peter Bradford says the offer represents a rare and mutual benefit for both Panoramic and IGO shareholders.

Independence Group is planning to take advantage of nickel miner Panoramic Resources’ operational issues and boardroom changes by launching a hostile scrip takeover bid.

IGO said it announced the bid after a number of unsuccessful attempts to engage with the Panoramic board on a takeover deal.

Panoramic shareholders are being offered one IGO share for every 13 Panoramic shares currently held.

The implied offer price is 47.6 cents per Panoramic share, based on IGO’s average share price over the past month and values Panoramic at $312 million.

IGO said this represented a 42 per cent premium to Panoramic’s last closing price and a 51 per cent premium to its average price over the past month.

It is also well above the 28 cents per share at which Panoramic recently raised $27 million.

That was the second capital raising undertaken this year by Panoramic, which has faced a number of operational setbacks after restarting production at its Savannah nickel project. 

The bid coincides with Panoramic transitioning to a new chairman, a new managing director and a new chief financial officer.

Experienced mining executive Peter Sullivan is due to succeed Brian Phillips as chairman at the company’s AGM in three weeks, while Victor Rajasooriar is due to take over from Peter Harold as managing director in one week.

Mr Sullivan is also chair of Panoramic's major shareholder, Zeta Resources, which has a 34.7 per cent interest.

Adding to the changes, long-serving chief financial officer Trevor Eton plans to retire in January.

Panoramic’s share price jumped as much as 33 per cent today to a high of 46 cents while IGO’s shares were little changed at $6.37.

Panoramic’s board advised shareholders to take no action in respect of the offer, which it described as unsolicited and highly conditional.

“The board will evaluate the offer and Independence Group’s bidder’s statement and provide shareholders with a recommendation in due course,” the company said in a statement.

IGO said it needed to add conditions to its bid to confirm the current status of Savannah’s operating performance, in light of the mine’s recent operational issues and the lack of engagement from Panoramic’s board.

The surprise bid would add to IGO’s suite of nickel assets, which include its Nova mine.

IGO managing director Peter Bradford said the offer represented a rare instance of genuine and obvious mutual benefit for both Panoramic and IGO shareholders.

“Panoramic shareholders will be able to crystallise future value from Savannah at a very attractive price and retain exposure to its upside potential, while also gaining exposure to Nova and Tropicana and IGO’s extensive portfolio of belt-scale exploration projects prospective for nickel and copper,” Mr Bradford said in a statement.

“We believe IGO has the financial, operational and technical capability to fully unlock value from Savannah and Panoramic’s exploration portfolio.

“Given our unique positioning as Australia’s largest independent producer of nickel, to unlock value at Savannah, we have decided to provide the offer for the consideration of all Panoramic shareholders.”

IGO said its strong preference was to conduct an expedited and thorough due diligence and proceed with a recommended offer from the Panoramic board but was prepared to press ahead with its current hostile bid.

It currently holds 24.9 million Panoramic shares, giving it a 3.8 per cent stake.

IGO is being advised by Citi and law firm Herbert Smith Freehills.


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