Perth-based Vietnam Industrial Investments Ltd has recommended its shareholders adjourn a vote today on the sale of its stake in two subsidiaries, concrete-reinforcing steel bar producers Vinausteel Ltd and Ssesteel Ltd, after receiving a superior offer.
Perth-based Vietnam Industrial Investments Ltd has recommended its shareholders adjourn a vote today on the sale of its stake in two subsidiaries, concrete-reinforcing steel bar producers Vinausteel Ltd and Ssesteel Ltd, after receiving a superior offer.
The company announced plans in March this year to sell its 70 per cent interest in Vinausteel Ltd and 100 per cent interest in Structure Steel Engineering Pte Ltd to Tata Steel subsidiary NatSteel Asia for an expected $13.1 million.
After refusing a subsequent $14.8 million bid from Prudential Vietnam Securities Investment Fund Management Company Limited on the grounds that the bid did not offer demonstrably better terms, as well as little certainty about its success.
However, a second bid, delivered last Thursday, of $16.2 million, has encouraged VII to reconsider - advising its shareholders to put off the vote at today's share meeting.
The full text of a company announcement is pasted below
On 7 May 2007 the Annual General Meeting was adjourned for 14 days so that VII's Independent Directors could consider and take advice on the unsolicited offer from Prudential Vietnam Securities Investment Fund Management Company Limited ("Prudential") to acquire the Company's 70% interest in Vinausteel Ltd and 100% interest in Structure Steel Engineering Pte Ltd ("Sale Assets"). The Prudential offer was made as an alternative to the sale of the Sale Assets to NatSteel Asia Pte Ltd ("NatSteel Sale").
On 15 May 2007 the Company released a Supplementary Explanatory Memorandum to the Notice of Meeting and Explanatory Memorandum for the AGM ("Notice of AGM") in which shareholders were advised that VII's Independent Directors:
(a) given the financial position of the Company, are not prepared to recommend the Prudential offer until it offers more certainty and
demonstrably better terms than the NatSteel Sale; and
(b) continued to recommend that, in the absence of a superior proposal, shareholders vote in favour of the NatSteel Sale.
On Thursday 17 May 2007, VII's lawyers received an unsolicited communication from Clayton Utz (lawyers for Prudential) enclosing an amended offer from Prudential which clarified some of the matters raised in the Supplementary Explanatory Memorandum and
increased the minimum cash payable to VII to US$13.3 million for the Sale Assets.
The amended Prudential offer for the Sale Assets:
Prudential also confirmed that it has funds available to enable the buyer to:
- perform its obligations in relation to the amended Prudential offer and any agreement formed pursuant to VII's acceptance of the amended Prudential offer;
- pay US$1,000,000 non-refundable deposit payable upon VII shareholders approving the amended Prudential offer;
- pay US$10,800,000 on completion of the sale of the Sale Assets to the buyer;
- pay US$1,500,000 on cancellation of the call option; and
- release VII from all existing liabilities provided in relation to SSESTEEL Ltd and Vinausteel Ltd.
VII's Independent Directors continue to have no information or basis to value the call option other than at US$1.5 million being the amount payable on cancellation. For this reason, VII's Independent Directors value the amended Prudential offer at US$13.3 million which is US$1.28 million (i.e. approximately 10.6%) more than the consideration VII expects to receive under the NatSteel Sale.
VII's Independent Directors are of the opinion that the amended Prudential offer has more certainty and demonstrably better terms than the NatSteel Sale.
Given the short period of time between receiving the amended Prudential offer and the holding of the adjourned AGM, VII's Independent Directors recommend that at the adjourned AGM shareholders:
