In a move to consolidate its copper interests, Perth headquartered Straits Resources Ltd has announced its intention to make an off-market takeover bid for all the shares of its subsidiary, Tritton Resources Ltd.
In a move to consolidate its copper interests, Perth headquartered Straits Resources Ltd has announced its intention to make an off-market takeover bid for all the shares of its subsidiary, Tritton Resources Ltd.
Straits already owns 58.62 per cent of Tritton's issued shares.
The offer is intended to consolidate Tritton as a 100% subsidiary and confirms Straits' stated goal of creating a significant Australian copper business.
Straits CEO, Milan Jerkovic said, "Acquiring full ownership of Tritton will enable Straits to more efficiently and effectively implement our copper strategy.
"It will also enable those Tritton shareholders who accept the share alternative consideration to retain their exposure to the Tritton assets, and participate in a diversified mining company with significant exposure to coal, copper and gold."
Straits is offering Tritton shareholders either 51 cents cash per Tritton share or scrip valued at 58 cents per Tritton share. It said both offers are at a premium to recent market prices.
Tritton's independent director and founding shareholder Mick McMullen welcomed the announcement and indicated his support for the offer, subject to further review by independent advisors.
Mr McMullen commented that, "The offer provides minority shareholders with a better opportunity to obtain broader exposure to the current resources boom or, to liquidate their holdings at a premium to recent trading levels."
Below is the edited announcement including offer terms:
Offer Terms
Each Tritton shareholder will be offered 1 Straits share for every 7.5 Tritton shares they hold in the company ("Share Alternative"); or, A$0.51 in cash for each Tritton share they hold ("Cash Alternative").
Based on Straits' closing price on 2 May 2006 of A$4.35, the Share Alternative represents:
an implied value per Tritton share of A$0.58; and
a 13.72% premium over the Cash Alternative.
The Straits Offer represents the following value equivalents to Tritton shareholders:
Share Alternative
Based on Straits closing price on 2 May 2006 of A$4.35, the Share Alternative represents:
A 14.85% premium to A$0.505, the closing price of Tritton shares on 2 May 2006.
A 21.08% premium to A$0.4790, the volume weighted average Tritton share price over the last 30 days.
A 23.48% premium to A$0.4697, the volume weighted average Tritton share price over the last 60 days.
Cash Alternative
The Cash Alternative of A$0.51 represents:
A 1.00% premium to A$0.505, the closing price of Tritton shares on 2 May 2006.
A 6.47% premium to A$0.4790, the volume weighted average Tritton share price over the last 30 days.
A 8.58% premium to A$0.4697, the volume weighted average Tritton share price over the last 60 days.
Mr Mick McMullen the Independent Director of Tritton has recommended that Tritton shareholders accept the Straits Offer in the absence of a superior proposal and subject to his receiving, as independent director, an independent expert report with respect to the Offer.
The Offer is subject to Straits obtaining acceptances which would entitle it to greater than 90% (by number) of Tritton's fully paid ordinary shares (including the shares it currently holds), no material adverse change, Foreign Investment Review Board approval and other conditions.
A summary of the conditions to the Offer is outlined in Attachment A to this announcement.
Benefits to Tritton Shareholders
By being offered a Cash or Share Alternative, Tritton shareholders will be able to choose the form of consideration that best suits their individual circumstances.
By choosing the Cash Alternative, Tritton shareholders will receive cash for their Tritton shares.
Straits Resources Limited ("Straits") (ASX:SRL) today announced its intention to make an Offer ("Straits Offer" or "Offer") by means of an off-market takeover bid for all the fully paid ordinary shares of its subsidiary, Tritton Resources Limited ("Tritton") (ASX:TTT). Straits already own 58.62% of Tritton's issued shares.
Mr Mick McMullen, the Independent Director on the Tritton Board and a founding
shareholder of the company, welcomed the announcement and indicated his support for the Offer, subject to further review by independent advisors. Mr McMullen commented that, "The offer provides minority shareholders with a better opportunity to obtain broader exposure to the current resources boom or, to liquidate their holdings at a premium to recent trading levels."
The Offer is intended to consolidate Tritton as a 100% subsidiary and confirms Straits' stated goal of creating a significant Australian copper business.
Since completing its Partial Takeover Offer for Tritton in August 2005, Straits has undertaken a thorough review of the Tritton orebody and the surrounding exploration targets. An updated Life of Mine plan is now nearing completion based on this new information.
Preliminary analysis shows that while the orebody tends to fall into the "difficult" category of operations, it is evident that the regional resource base and existing infrastructure has the potential to host a meaningful, mid-size copper producer in the medium to longer term.
However, to deliver on this potential will require significant further investment in the asset base and Straits believes that this is best achieved through a wholly owned enterprise rather than through a separate company.
Straits CEO, Milan Jerkovic said, "Acquiring full ownership of Tritton will enable Straits to more efficiently and effectively implement our copper strategy. It will also enable those Tritton shareholders who accept the share alternative consideration to retain their exposure to the Tritton assets, and participate in a diversified mining company with significant exposure to coal, copper and gold."
In copper, Straits owns and operates the Whim Creek Copper mine in Western Australia, which is on track to produce 16,000 - 17,000 tonnes of copper cathode in 2006. Tritton's major asset is the Tritton Copper Mine near Nyngan in New South Wales. The operation is expected to produce approximately 26,000 tonnes of copper in concentrate this year. Tritton also holds a significant copper exploration portfolio in the surrounding areas to the mine.
By choosing the Share Alternative, Tritton shareholders will receive Straits shares in exchange for their Tritton shares. As shareholders of Straits, they will obtain a number of benefits, including:
Completing the full acquisition of Tritton will enable Straits to more effectively apply its management and other resources to growing its copper business.
Access to future dividends declared on the Straits shares issued under the Offer;
A better funding platform for the development of the Tritton asset base;
Exposure to an emerging, diversified resources portfolio including copper, coal, gold and other bulk commodities;
Enhanced liquidity in a larger company with market capitalisation over A$700
million; and
Roll over relief for capital gains purposes once 80% acceptances are reached.
Acceptance of the Offer is not expected to result in an increase in earnings per share for Straits.
Documentation, Process and Timing
Straits expects that its Bidder's Statement will be lodged with ASIC by late May 2006 and sent to Tritton shareholders shortly thereafter.
The Offer will remain open for one month, subject to permissible extensions.
Euroz Securities Limited is acting as financial adviser and Corrs Chambers Westgarth as legal adviser to Straits.
