The long-running takeover battle for Tethyan Copper Company Ltd has produced a surprise outcome, with Tethyan negotiating an agreed $190 million offer from Chilean mining company Antofagasta plc.
The long-running takeover battle for Tethyan Copper Company Ltd has produced a surprise outcome, with Tethyan negotiating an agreed $190 million offer from Chilean mining company Antofagasta plc.
The Antofagasta offer, pitched at $1.20 per share, trumps the existing offer of 77.5 cents per share from Hong Kong investor Crosby Capital (via Skafell Ltd).
Tethyan has vigorously opposed the Crosby offer, saying it undervalued the company, but said its directors would unanimously recommend the higher Antofagasta offer.
The new deal follows the announcement in December of a joint venture with Antofagasta, which Tethyan used to help fend off the hostile Tethyan offer.
"The joint venture with Antofagasta that we announced in late December offered long term upside to our shareholders and was very well received," said Tethyan managing director David Moore.
"However the board is unanimously of the view that this new cash offer represents an outstanding outcome for shareholders and we have no hesitation in recommending its acceptance in the absence of a superior offer."
Antofagasta has also entered into an agreement with Barrick Gold Corporation to jointly develop Tethyan's Reko Diq copper-gold project in Pakistan, the company's main asset.
Separately, Mincor Resources (which spun out Tethyan in 2003 at a price of 30 cents per share) said it would accept Antofagasta's offer for the 12.5 million Tethyan options it currently holds.
The full announcements from Tethyan and Mincor are below:
The Tethyan media release.
Recommended cash takeover offer
Antofagasta PLC and Tethyan Copper Company Limited have today reached an agreement under which Antofagasta will make an off market conditional takeover offer to acquire all of the shares in Tethyan at a cash price of $1.20 per share.
Tethyan's directors will unanimously recommend that shareholders accept the Antofagasta offer, in the absence of a superior offer.
Your directors intend to accept the offer for all of the shares that they own or control, in the absence of a superior offer.
Antofagasta's offer:
- values Tethyan at approximately A$190 million on a fully diluted basis;
- is at a 35% premium to Tethyan's closing price of 89 cents per share on Tuesday 14 February 2006;
- is at a 55% premium to the current Skafell offer of 77.5 cents per share, and a premium of 88% over the original Skafell offer of 64 cents per share; and
- is at a 100% premium to Tethyan's share price of 60 cents per share on 23 December 2005, the day before the announcement of the original Antofagasta joint venture deal.
Antofagasta has also entered into an agreement with Barrick Gold Corporation whereby Antofagasta and Barrick will establish a 50:50 joint venture in relation to Tethyan's Reko Diq copper-gold project in Pakistan.
Barrick has also agreed to support Antofagasta's offer for Tethyan and to reimburse Antofagasta for half the acquisition costs.
Speaking today, the Managing Director of Tethyan, Mr David Moore said:
"The joint venture with Antofagasta that we announced in late December offered long term upside to our shareholders and was very well received. However the board is unanimously of the view that this new cash offer represents an outstanding outcome for shareholders and we have no hesitation in recommending its acceptance in the absence of a superior offer.
"The Antofagasta cash offer is at a substantial premium to our recent trading range, which itself represents an all-time high and already has built into it an existing cash takeover offer, the previously-announced Antofagasta transaction, the proposed London listing, and the strongest copper price we have seen in a generation.
"The decision by Barrick to join with Antofagasta to support this offer is further evidence of the potentially world class status of the Reko Diq project. While I was personally looking forward to continuing to drive the development of this project, I am pleased that the combined financial and technical resources of Antofagasta and Barrick will be brought to bear at Reko Diq, and are likely to ensure that the full potential of the project is realised as quickly as possible.
"Over the past five years Tethyan and its people have laboured mightily to create value at Reko Diq. We have been warmly welcomed and strongly supported by the people and governments of Pakistan and Balochistan. I am confident that the commitment of two of the world's leading resources companies to the project will result in its rapid development, to the great and lasting benefit of the people of Pakistan."
Offer Conditions
The takeover offer from Antofagasta is subject to a number of conditions including:
- Antofagasta securing relevant interests in at least of 90% of Tethyan's shares, and all of Tethyan's options either being exercised, cancelled or transferred, or Antofagasta being in a position to compulsorily acquire the outstanding options;
- Antofagasta securing Foreign Investment Review Board approval and any other necessary regulatory approvals required to make the offer;
- no material acquisitions, disposals or commitments occurring; and
- no material adverse change, change of control events nor prescribed occurrences occurring.
A detailed list of the offer conditions are set out in the attached copy of Antofagasta's announcement to the London Stock Exchange.
Implementation of the Offer
Tethyan and Antofagasta have entered into an Implementation Agreement under which Tethyan's earlier joint venture deal with Antofagasta (which was in the process of final documentation and remained subject to shareholder approval) has been terminated and a process agreed whereby Tethyan will assist Antofagasta in completing its offer. Antofagasta has simultaneously entered into a separate arrangement with BHP Billiton in relation to the termination or acquisition of BHP Billiton's Clawback right over the Reko Diq Project.
Antofagasta and Tethyan have also agreed that in the unlikely event that the Antofagasta offer is not successfully completed but Antofagasta acquires the Clawback Right from BHP Billiton, they will negotiate in good faith to establish a 50:50 joint venture on terms similar to those of the joint venture proposal announced in late December.
Tethyan has also entered into a Deed of Undertaking which provides Antofagasta with rights of exclusivity during the bid period (subject to Tethyan's director's fiduciary obligations) and the entitlement to be paid a break fee of $1.9 million (approximately 1% of the fully diluted market capitalisation of Tethyan at the bid price) in certain circumstances, including:
- a competing superior offer is recommended by Directors;
- Tethyan Directors withdraw their recommendation for Antofagasta's offer;
- control of Tethyan passes to a third party;
- a material adverse change occurs that has not been previously disclosed to Antofagasta and relates to a period prior to the date of this announcement;
- Tethyan is in material breach (and which breach remains un-remedied following notice) of a material provision of either the Deed of Undertaking or Implementation Agreement; or
- there is a breach of the no material acquisitions, disposals or commitments or no prescribed
occurrences conditions to the Antofagasta offer and those breaches are not waived.
Further details of the terms of the Implementation Agreement and Deed of Undertaking are also attached to this announcement.
Mincor Pre-Bid Acceptance
Antofagasta has also entered into an agreement with Mincor Resources NL under which, subject to no superior offer being made, Antofagasta will acquire Mincor's 12.56 million options over ordinary shares in Tethyan, representing approximately 7.9% of Tethyan's diluted share capital, for $1.05 per option (determined by reference to the offer price of $1.20/share less the 15 cent exercise price). The amount received will be increased if a higher competing offer is made.
Tethyan was originally a subsidiary of Mincor prior to its initial public offering. David Humann, the chairman of Tethyan and David Moore, the managing director of Tethyan are respectively the chairman and managing director of Mincor.
Timing of Offer
Antofagasta's bidder's statement and the Tethyan board's target statement are expected to be mailed to Tethyan shareholders within the next few weeks. These documents will contain full details of the offer and information on how to accept the offer.
Impact on the Extraordinary General Meeting Convened for 23 February 2006
In light of Antofagasta's announced offer and your Directors' recommendation of its terms, Tethyan intends to withdraw the resolutions to approve the now terminated Antofagasta joint venture and the issue of options to advisers as part of the proposed AIM listing at the extraordinary general meeting scheduled for 23 February 2006.
Tethyan will however proceed with the resolution to approve the issue of new shares for working capital purposes as and when necessary. The Antofagasta offer permits Tethyan to issue new shares to raise not more than $5,000,000 provided that Antofagasta has been given a right of first refusal to subscribe for those shares.
The Mincor media release.
We advise that Mincor Resources NL has today entered into a Pre-Bid Acceptance Agreement ("Agreement") with Antofagasta PLC in connection with an off-market takeover bid that Antofagasta has announced for all the shares in Tethyan Copper Company Limited. Antofagasta's takeover bid is priced at $1.20 per Tethyan share.
Tethyan is a former subsidiary of Mincor's that was spun out in a successful IPO in October 2003 at a listing price of 30 cents per share. All Mincor's shares in Tethyan were distributed to Mincor's shareholders at that time via a distribution in specie.
Mincor's agreement with Antofagasta covers Mincor's remaining interest in Tethyan, being 12,557,566 options ("Tethyan Options"), each of which is convertible into one ordinary share in Tethyan at an exercise price of 15 cents per Tethyan Option.
Under the terms of the Agreement Mincor will, provided that the Antofagasta bid is unconditional and the Agreement has not been terminated, transfer to Antofagasta all its Tethyan Options, for a payment from Antofagasta calculated by subtracting the exercise price of the Tethyan Options from the Antofagasta bid price, resulting in a net payment to Mincor of $1.05 per option. Alternatively, if Mincor elects to exercise the options, Mincor has agreed that it will accept the Antofagasta takeover bid for all the Tethyan shares it will then hold.
While the Agreement applies, Mincor is restricted from dealing with the Tethyan Options or with any Tethyan shares derived from the exercise of those Options.
The Agreement contains mechanisms which will allow Mincor to benefit fully from any superior takeover offer that may be made for Tethyan.
The Agreement will terminate if a higher bid is announced and is not matched by Antofagasta within a specified time period. The Agreement will also terminate if the Antofagasta bid has not become unconditional within three months following the dispatch of the offers to Tethyan shareholders.
Yours sincerely
MINCOR RESOURCES NL
BRIAN LYNN
Company Secretary
