13/11/2008 - 14:04

Take no action: Perilya

13/11/2008 - 14:04


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Perilya has emphasised to its investors to take no action regarding a takeover offer from CBH Resources.

Perilya has emphasised to its investors to take no action regarding a takeover offer from CBH Resources.



Full announcement below:





Perilya (ASX:PEM), the New South Wales zinc, lead and silver miner today reiterated its advice to shareholders to TAKE NO ACTION in relation to CBH's unsolicited offer.

On 2 October 2008 CBH Resources Limited (CBH) announced its intention to make an all scrip offer to acquire all of the shares in Perilya.

On 12 November 2008, CBH released its Bidder's Statement to the Australian Securities Exchange in relation to its proposed offer. CBH's bid offers 4.2 CBH shares for each Perilya share on terms and conditions outlined in CBH's Bidder's Statement.

Perilya's Executive Chairman, Patrick O'Connor, said "It was the Perilya Board's view that CBH's offer, which is highly conditional, is opportunistic. Accordingly, we strongly advise Perilya Shareholders to TAKE NO ACTION until the Board makes its formal recommendation".

"We will respond in a timely fashion to allow shareholders sufficient opportunity to review Perilya's Target Statement and make an informed decision. We anticipate releasing Perilya's Target Statement to respond to CBH's Bidder's Statement, in early December 2008".

Perilya's Board and its advisors are currently carrying out a thorough review of CBH's Bidder's Statement and prior to the Perilya Board making its recommendation to shareholders in Perilya's Target Statement, the Board would like to bring the following matters to shareholders attention:

- A merger with CBH could expose Perilya shareholders to additional risks, including CBH's historically high cash cost asset at its Endeavor operation and approximately $140 million in debt with the associated debt-servicing costs in the order of $10 million per annum. Exposure to these additional risks may not be in the best interests of Perilya shareholders;

- CBH recently announced further reductions in production at its Endeavor mine, on 10 November 2008; the Perilya Board has not yet fully assessed the impact of these changes on CBH or any merged entity;

- CBH's interest in Perilya is a reflection of the inherent strength and value of Perilya's Broken Hill Operation, which includes a 2.8mtpa concentrator plant; and

- CBH has not clearly detailed in its Bidder's Statement, what CBH has previously reported as 'compelling financial and operational logic' for the merger.

The Board also draws shareholders attention to Perilya's recently completed Resources and Reserves update (as announced on 10 November 2008). The Ore Reserves, independently reviewed by AMC, provide for 9 years of mining at the Southern Operation, at conservative price assumptions and also show significant additional Mineral Resources capable of conversion to Reserves at a later date.

Together with its fully-owned and established concentrator and associated infrastructure, Perilya is well positioned to rapidly ramp-up production, increase profitability and extend the life of its Broken Hill assets when metal prices are conducive to doing so.

Perilya has no corporate debt. Perilya has a clean and strong balance sheet that is a conservative reflection of the Company's reduced exploration and production activities and is prudent in the current market.

Perilya remains amenable to engaging with CBH to process external ore through Perilya's concentrator in Broken Hill. This is an option that is available to CBH to consider for the processing of ore from its Rasp operation, and one that Perilya remains open to exploring along the lines of a commercial arrangement for the mutual benefit of both parties.

Perilya anticipates releasing its Target's Statement to respond to CBH's Bidders Statement, in early December 2008.

Perilya has appointed UBS Investment Bank as Corporate Advisors and Cochrane Lishman as Legal Advisors.


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