Territory board backs Noble bid

Territory Resources' board of directors has unanimously recommended its shareholders accept the $133 million takeover bid offered by Hong Kong commodities trading house Noble Group.

Territory said in a statement today that its board viewed Noble's 50 cents per share unconditional on-market offer launched last week as a superior proposal to that of South Africa's Exxaro Resources, which offered 46 cents per share with a 60 per cent minimum acceptance caveat last month.

If they accept Noble's offer, shareholders would receive their cash payment within three days of acceptance, rather than within one month for the Exxaro offer.

Noble Group is already Territory's major shareholder, with a 32.1 per cent interest.

Territory's board, sans chairman Andrew Simpson, had formerly recommended shareholders accept Exxaro's bid.

The decision to change the recommendation will trigger a break fee of $1.56 million, which Territory must pay to Exxaro as set out in the bid implementation agreement executed May 22.

"This fee will be recognised in Territory's FY2011 full year profit and loss as a transactional expense and accordingly will impact the forecast full year result," Territory's statement said.

The board also advised that in light of Noble's offer, it would not issue an option to Exxaro to subscribe for up to 15 per cent of Territory at 46 cents per share.

"Consequently, the undrawn US$36 million debt facility provided by Exxaro (through RMB) to Territory is capable of being cancelled immediately," the statement said.

Territory Resources shares are currently trading higher than the Noble offer, at 52 cents.