01/08/2018 - 13:46

Paladin makes full takeover bid for Summit

01/08/2018 - 13:46

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Paladin Energy has announced plans to move to full ownership of fellow Perth-based uranium company Summit Resources, in a scrip deal worth around $7.8 million.

Paladin makes full takeover bid for Summit
Paladin suspended operations at its Langer Heinrich project in May.

Paladin Energy has announced plans to move to full ownership of fellow Perth-based uranium company Summit Resources, in a scrip deal worth around $7.8 million.

Paladin is already Summit’s largest shareholder with an 82.1 per cent stake, and has proposed Summit’s shareholders receive one new Paladin share for each Summit share held.

The offer values Summit’s shares at 20 cents each, 8 cents more than its closing price yesterday, and is subject to approval from 75 per cent of Summit’s shareholders by October 12.

In a statement, Paladin said acquiring the remaining Summit shares would cut costs across its operations.

“By purchasing the shares owned by third-party shareholders and delisting Summit, cost savings can be achieved in the areas of compliance and regulatory costs,” it said.

Paladin said the takeover would also benefit Summit as the company had limited available cash and uncertainty as to how it would fund its operations going forward.

Summit has several uranium projects in Australia, with its principal focus the Mount Isa North project in Queensland.

The project consists of five major uranium deposits and several smaller prospects located 15 kilometres outside of Mount Isa.

Paladin owns the Mayingee project, located 85km inland from Onslow in Western Australia’s north-west.

It also has projects overseas in Malawi, Canada and Namibia.

In May, Paladin indefinitely suspended operations at its Langer Heinrich project in Namibia due to low uranium prices and increasing expenses.

The independent directors of Summit unanimously recommended that Summit shareholders accept the offer in the absence of a superior proposal.

Summit non-executive director Mal Randall said the takeover would be in the interest of the company’s shareholders.

“Paladin’s offer provides Summit shareholders with an opportunity to become shareholders in a company that has exposure to a broader range of uranium projects and with a stock which has greater liquidity than what Summit currently enjoys,” he said.

Steinepreis Paganin is acting as legal adviser to Paladin, and Bellanhouse Lawyers is acting as legal adviser to Summit.

Shares in Paladin were flat at 20 cents each at 3pm AEDT.

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