12/12/2007 - 11:44

PT Bumi to make $455m Herald takeover

12/12/2007 - 11:44

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Indonesian mining company PT Bumi Resources Tbk has announced plans to make a $455 million cash takeover offer for West Perth-based Herald Resources Ltd, which is seeking to develop a zinc/lead project in Sumatra.

Indonesian mining company PT Bumi Resources Tbk has announced plans to make a $455 million cash takeover offer for West Perth-based Herald Resources Ltd, which is seeking to develop a zinc/lead project in Sumatra.

The offer could lead to a bidding war for Herald, after base metals miner Perilya Ltd snapped up an 8.86 per cent shareholding last month.

Bumi said its offer will be at $2.25 cash per share, which it said was a 32 per cent premium above Herald's share price over the past week.

It's announcement led to a 23 per cent jump in Herald's share price to $2.26 per share at close of trade today.

"The offer provides Herald shareholders with an opportunity to realise full value for their investments as cash while eliminating commodity price uncertainties and the risks of further delays, cost overruns and funding demands of the Dairi project," BUMI chairman Ari Hudaya said.

But Herald today advised shareholders to take no action in relation to the bid until the Herald board had considered the offer and made a formal recommendation.

Herald announced in September that the estimated cost of the Dairi project had increased by 15 per cent beyond its earlier estimate of US$192 million (A$215 million).

Herald chairman Terry Allen told the company's annual meeting last month that Herald had already spent $50 million on the project but was still awaiting final approvals.

"There is no doubt that the past 12 months has been a frustrating one for both shareholders and staff due to the lack of Indonesian forestry approval to allow our high grade Dairi project to proceed to full development," Mr Allen told the meeting.

He described the machinations of the Indonesian system as "at times incomprehensible".

Herald said last month that, once it obtained approval for the project, it intended to raise $100 million of equity via a capital raising, and that it was consulting with its adviser Euroz Securities about the most appropriate structure.

 

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