THE long-running bid by CI Resources Ltd for unlisted Christmas Island phosphate miner Phosphate Resources Ltd has hit a major hurdle, failing to win Federal Court approval for its proposed scheme of arrangement. The future of the friendly merger is now in doubt following the decision, which resulted from a legal challenge to the merger by some of Phosphate’s shareholders. In July last year, when CIR was known as Asset Backed Holdings, it launched an off-market bid for the shares it did not already own in PRL at $3 cash a share. At that time, the company owned 34.3 per cent of the issued capital in PRL. A large number of shareholders in PRL, an unlisted public company, are members of the Union of Christmas Island Workers, which has been previously reported as having reservations about the merger. After the close of trading on the Australian Stock Exchange on November 23, CIR issued an announcement advising that Justice French of the Federal Court had not approved a scheme of arrangement between PRL and its shareholders. “The court’s reasons for its decision will be released in due course along with the board’s position in respect to the decision and investment in PRL,” CIR company secretary Peter Torre said in an ASX announcement. UCIW secretary Gordon Thompson told WA Business News in March this year he was taking a wait-and-see approach to the merger plan, with the composition of the merged company’s board one of his main considerations. To succeed the scheme of arrangement needs the approval of 75 per cent of PRL’s shareholders. CIR recently entered into an agreement to acquire the controlling interest in a Singaporean-based company engaged in a joint venture to establish a fertiliser plant in south-west China. PRL generates annual revenues of about $55 million from exports of about 700,000 tonnes of Christmas Island phosphate a year. The boards of both companies support the merger plan, which values the phosphate miner at about $11.2 million.
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