06/08/2008 - 13:06

Palmer makes formal bid for Australasian

06/08/2008 - 13:06

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Billionaire Clive Palmer's Resource Development International Ltd has made a formal bid for Australasian Resources Ltd, which is set to play a key role in the mining of 20 billion tonnes of iron ore from the Balmoral tenements in Western Australia.

Billionaire Clive Palmer's Resource Development International Ltd has made a formal bid for Australasian Resources Ltd, which is set to play a key role in the mining of 20 billion tonnes of iron ore from the Balmoral tenements in Western Australia.

The formal bid marks one of the first steps by private company RDI to build itself into a resources major, with the company already forming an alliance with MEO Australia Ltd over its gas licences off the state's coast.

RDI plans to launch a $5 billion initial public offer later this year for a Hong Kong Stock Exchange listing and may also float on the Australian market.

RDI has appointed Macquarie Bank and UBS to manage the proposed IPO.

Under the merger bid, Australasian shareholders will receive RDI shares in exchange for their Australasian shares, with the number of RDI shares to be issued determined by dividing $2.20 by the company's IPO price.

The merger is subject to a number of conditions including a shareholder vote and court approval.

It is proposed that the merger will be wrapped up by late 2008.

Mr Palmer already holds a 66.4 per cent interest in Australasian, which is currently developing the $2.7 billion Balmoral South iron ore project with partner Shougang.

RDI was recently formed to acquire iron ore, nickel, exploration and energy interests, including rights to 20 billion tonnes of iron ore on the Balmoral tenements held by Mr Palmer.

 

Below is the full announcement:

Further to the announcement of 24 July 2008 Australasian Resources Limited (ASX: ARH) advises that it has entered into a Merger Implementation Agreement with Resource Development International Ltd (RDI).

RDI is a company which has recently been formed to acquire substantial iron ore, nickel, exploration and energy interests, including rights to extract 20 billion tonnes of iron ore from the Balmoral tenements held by Mineralogy Pty Ltd. RDI has appointed Macquarie Bank and UBS to manage a proposed A$5 billion IPO on the Hong Kong Stock Exchange (HKSE).

The proposed merger would provide ARH shareholders with the opportunity to participate in a company that is expected to have one of the largest iron ore asset bases among global listed companies.

The material terms, conditions and key features of the merger are:

RDI will offer to acquire all shares in ARH for shares in RDI by means of a scheme of arrangement.

ARH shareholders will receive RDI shares in exchange for their ARH shares. The number of RDI shares to be issued for each ARH share will be determined by dividing A$2.20 by the RDI IPO price, being the price of an RDI share offered in RDI's disclosure document for its proposed initial public offer and listing on the HKSE (and / or ASX)..

The merger is conditional upon:

o ARH receiving a satisfactory Independent Expert's Report within 30 days of 4 August 2008;

o RDI being granted approval for the listing of RDI's shares on the HKSE and the HKSE informing RDI that all RDI shares to be issued to ARH shareholders will be quoted on HKSE or ASX approving RDI for admission to ASX and quotation of RDI shares on ASX;

o ARH Shareholder approval passed by the required majority of ARH shareholders not associated with RDI; and

o Court approval.

RDI must use its reasonable endeavours to investigate the possible establishment of a share sale facility by which ARH Shareholders who would receive less than $5,000 worth of RDI Shares (calculated at the Listing Price) under the Scheme can elect to sell the RDI Shares they receive as soon as practicable following the date on which the merger becomes effective without brokerage being payable.

RDI must make an offer to ARH option holders for their ARH options to be transferred or cancelled. The consideration for the ARH options will comprise either RDI options on equivalent terms or a cash amount based on the value of the consideration provided to ARH shareholders and the terms of the options.

It is proposed by RDI that the merger and the IPO will be completed by late 2008.

It is expected that capital gains tax rollover relief will be available to ARH's shareholders and ARH is currently obtaining advice on this matter.

ARH shareholders will be provided with an independent expert's report as to whether the proposal is in the best interests of ARH shareholders.

The merger agreement may be terminated by either party if the merger is not implemented by 30 March 2009.

Under the proposal, ARH would become a wholly owned subsidiary of RDI. The assets of ARH would form part of a significantly larger RDI asset base.

A Board committee of non-associated directors of ARH comprising Andrew Caruso, Nicholas Jukes and Paul Piercy will continue to oversee the preparation of the merger documentation for approval by shareholders.

The following group of advisors have been appointed by ARH to assist with the merger process:

McKenzie Moncrieff Lawyers (legal);

Ernst & Young (commercial, taxation); and

RFC Corporate Finance Ltd (corporate advisory).

BDO Kendalls Corporate Finance (WA) Pty Ltd has been appointed as the Independent Expert with respect to the merger.

International Minerals Pty Ltd (presently a 100% subsidiary of ARH) will continue to advance the Balmoral South Project as per current plans with Shougang Corporation.

Full details of RDI and the merger proposal will be contained in the scheme booklet to be provided to shareholders.

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