02/12/2008 - 09:48

Waratah accepts revised Palmer offer

02/12/2008 - 09:48

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Billionaire Clive Palmer is set to take control of Toronto-listed Waratah Coal, after the company accepted a revised offer by his private company Mineralogy.

Waratah accepts revised Palmer offer

Billionaire Clive Palmer is set to take control of Toronto-listed Waratah Coal, after the company accepted a revised $126 million offer by his private company Mineralogy.

In a statement to shareholders, certain Waratah directors and senior officers said they have signed binding agreements to transfer their shares to Mineralogy, representing some 17.3 per cent of Waratah's issued capital.

Mineralogy currently holds a 37.2 per cent stake.

Under the revised offer, Mineralogy is offering $C1.60 cash for each Waratah share, with the offer scheduled to close on December 15.

The revised offer is at a 28 per cent premium to Waratah's closing price on the Toronto Stock Exchange Venture on Friday.

Waratah had previously rejected Mineralogy's original offer of $C1.41 cash, saying the bid was opportunistic and undervalued the company.

However a review of the revised offer by Merrill Lynch Canada said it is fair from a financial point of view and is in the best interests of shareholders.

Waratah plans to develop a large-scale thermal coal mine in the Galilee Basin, which would be linked to a new coal terminal on the coast by a railway line.

Mr Palmer's acquisitive nature also extends to Perth company Australasian Resources, which has accepted a merger agreement with the billionaire's other company, Resources Development International.

The merger is conditional on RDI listing on the Hong Kong stock exchange, which was planned for the end of the year however that has been delayed.

RDI is currently advancing its draft prospectus.

 

Waratah's announcement is pasted below:

 

Waratah Coal Inc. ("Waratah") (TSX-V/ASX: WCI) and Mineralogy Pty Ltd. ("Mineralogy") announced today that they have entered into a definitive support agreement in connection with a revised offer by Mineralogy or a wholly-owned subsidiary of Mineralogy (the "Amended Offer"). Pursuant to the terms of the Amended Offer, Waratah shareholders will be entitled to receive CDN$1.60 in cash per share. Mineralogy has also agreed to extend the offer to 11:59 p.m. (local time) on December 15, 2008.

Mineralogy's obligation to take up and pay for the Waratah shares is subject to the condition, among others, that there shall have been validly deposited under the Amended Offer and not withdrawn at least 50.1% of the shares on a fully diluted basis (fully diluted excludes all of the "out the money" options and warrants), unless waived.

Based on a careful review of the revised terms of the Amended Offer, the receipt of Merrill Lynch Canada Inc. opinion that the Amended Offer is fair from a financial point of view to Waratah Shareholders, consideration of the current global economic conditions and assessment of alternative transactions to the Mineralogy Amended Offer, the Special Committee and Waratah's Board of Directors have determined that the Amended Offer is fair from a financial point of view to Waratah's shareholders and is in the best interests of the company and its shareholders. Accordingly, Waratah's Board of Directors recommends that Waratah shareholders accept the Amended Offer.

Nicholas Mather, the Chairman of Waratah's Board of Directors, said "Over the past two months, the Board has thoroughly evaluated a full range of alternatives to Mineralogy's initial offer with the assistance of Waratah's financial and legal advisors. After further discussions with Mineralogy, the Board is recommending that shareholders tender to the Amended Offer."

Mr. Mather added "The Amended Offer price is 13.5% higher than Mineralogy's original offer price, and a 28% premium to Waratah's closing price on the TSX Venture Exchange at Friday's close."

The support agreement provides, subject to its terms, that the Waratah Board of Directors will issue a notice of change to its directors' circular that will contain its favourable recommendation to Waratah shareholders, together with the fairness opinion provided by Merrill Lynch Canada Inc. Such notice of change will be issued promptly after Mineralogy mails a notice of extension and variation in connection with the Amended Offer. The support agreement contains, among other things, provisions for a $2.7 million break fee, non-solicitation of competing offers, notification by Waratah to Mineralogy of the receipt of any alternative proposals from third parties and a right on the part of Mineralogy to match any such proposal.

Certain directors and senior officers of Waratah (including their affiliates), who collectively own 8,433,506 shares and 1,170,000 in-the-money options and 1,413,191 in-the-money warrants to acquire shares, have entered into lock-up agreements with Mineralogy. Under such lock-up agreements, such directors and senior officers (including their affiliates) agree to tender the shares owned by them, or over which they exercise control or direction over, and any shares acquired by them after the date of the lock-up agreement to the Amended Offer. The aggregate total of 11,016,697 shares that such directors and senior officers (including their affiliates) collectively beneficially own, or
exercise control or direction over, represents approximately 17.3 percent on a fully diluted basis.

 

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