Sphere Minerals has reiterated its support for Xstrata's $3.00 per share takeover offer, after disclosing that Chinese group Sin-Tang Development is believed to be pursuing an alternative $130 million capital raising pitched at $3.25 per share.
Sphere also said today it has not received a proposal from Sin-Tang despite persistent market rumours and media speculationl.
Sphere said it understands that Sin-Tang representatives are contacting Sphere shareholders and the media, and are rumoured to be proposing the underwriting of a Sphere equity raising of $130 million, priced at $3.25 per share, coupled with the provision of $350 million debt by associates of Sin-Tang in order to develop Sphere's Askaf project.
"With a $3.00 cash offer on the table from Xstrata, were it to eventuate it is highly unlikely that the rumoured Sin-Tang proposal would secure Sphere Board consent in the current circumstances," the company said.
It added that participation in the rumoured equity raising may be unattractive to many shareholders in the event the Sphere share price falls significantly below the current trading price should Xstrata's offer lapse.
"This would result in Sin-Tang increasing its interest in Sphere and significant dilution for existing Sphere shareholders.
"The Sphere Board reiterates that Sin-Tang has had more than two and a half months to submit a proposal for consideration, yet no proposal has been received by the Board.
"The Sphere Board regards Sin-Tang's rumoured proposal as uncertain and not without significant risk compared to the tabled Xstrata cash offer of $3.00 per share.
"The Board reiterates its unanimous recommendation to accept Xstrata's cash offer of $3.00 per share. in the absence of a superior proposal."
