CRP
19/04/2016 08:40
GENERAL
PRICE SENSITIVE
REL: 0840 HRS Chatham Rock Phosphate Limited
GENERAL: CRP: Pre Break Announcement
PRE BREAK ANNOUNCEMENT
Under NZAX Listing Rule 10.2 and clause 2 of the constitution
of Chatham Rock Phosphate Limited
19 April 2016
Proposed Share Offer
Chatham Rock Phosphate Limited (CRP) proposes to issue:
a. 41,666,667 ordinary shares (on an unpaid basis) at an issue price of
NZ$0.006 per share (Investor Shares) (being $250,000 in aggregate) to George
Wong Kim Pau and Happy Sim (together, the Investor), under a subscription
agreement and as announced to the market on 4 March 2016; and
b. 166,666,667 ordinary shares at an issue price of NZ$0.006 per share (New
Shares) ($1,000,000 in aggregate) to qualified investors,
(together, the Share Issue).
Investor Share The Investor Shares are to be issued on an unpaid basis.
The Investor Shares are to be paid up at a rate of NZ$50,000 per month (being
8,333,333 Shares) commencing on or before 1 October 2016. To the extent to
which they have been paid up, the Investor Shares will rank pari passu in all
respects with other issued Shares.
New Share The New Shares are to be issued on a fully paid basis and will
rank pari passu in all respects with other issued Shares.
The issue of the Investor Shares is conditional on no shareholder meeting
being requisitioned for the purpose of NZAX Listing Rule (Rule) 10.2.2 as
detailed below.
Use of Pre-Break Announcement Procedure
The Offer is being effected under the Pre-Break Announcement procedure
permitted by Rule 10.2 and clause 2 of CRP's Constitution.
The Pre-Break Announcement procedure is being used because undertaking the
Share Issue would not comply with Rule 7.3.5 in that if the Share Issue was
fully subscribed, the aggregate number of Shares issued will exceed 25% of
the number of Shares on issue prior to the Share Issue.
This Pre Break Announcement will allow CRP to issue up to NZ$1,250,000 in
Shares (in aggregate) under Rule 7.3.1, without having to seek shareholder
approval.
Shareholder Right to Call a Shareholders Meeting
As required by Rule 10.2.2, the Share Issue is conditional upon no special
meeting of shareholders being called pursuant to section 121 of the Companies
Act 1993 within a 10 business day period from the date of this announcement.
Section 121 requires that the Board of CRP call a special meeting of
shareholders where, shareholders holding Shares together carrying not less
than 5% of the voting rights entitled to be exercised at a meeting of
shareholders, submit a written request for a meeting.
Rationale for the Offer
CRP holds interests in an offshore phosphate development project known as
Chatham Rise Project. Over the previous 10 years, CRP has been working
towards permitting the project. CRP holds a Mining Licence but is still
working to obtain a marine consent from the Environmental Protection
Authority (EPA). An application for such consent was declined in early 2015
by the EPA's decision making committee. As a response, the Board has
determined that CRP's business will evolve from a single project focus into a
more diversified business, principally involving other phosphate projects,
both onshore and offshore. In addition the Board is working towards
reapplying for a marine consent.
The Board has determined that diversification of its business strategy will
be significantly easier if CRP was listed on a more recognised and liquid
overseas stock market for mining companies. A listing on the TSX Venture
Exchange (TSX.V) was identified as logical as the TSX.V is a leading exchange
for mining stocks and also has a major fertiliser component. CRP is seeking
to achieve this through a reverse takeover offer of CRP by Antipodes Gold
Limited (AXG) (Takeover Offer). All announcements on the Takeover Offer can
be found at CRP's website
(http://www.rockphosphate.co.nz/news?category=NZX%20Announcements).
Under TSX listing rules, the Takeover Offer requires the merged entity to
hold 12 months' working capital following the successful Takeover Offer. The
current baseline level of working capital assessed as required by CRP to 31
May 2017 is NZ$1.5 million (Working Capital Requirement). $350,000 of this
amount has already been secured.
CRP will apply the funds raised under the Share Issue to fund this Working
Capital Requirement.
The Working Capital Requirement (together with cash on hand) will meet the
following budgeted costs to be incurred between now and 31 May 2017:
o day-to-day operating expenses of CRP (estimated at approximately
NZ$550,000);
o costs associated with the Takeover Offer (to the extent they are not
payable by AXG under the Takeovers Code (estimated at approximately
NZ$100,000)); and
o Chatham rise project related expenses such as scientific work and licence
fees (estimated at approximately NZ$1.6 million).
Takeover Offer - Steps to Completion
Upon raising the Working Capital Requirement, AXG will seek to receive, from
CRP shareholders holding 55% of CRP shares, executed pre-bid lock up
agreements under which the CRP shareholders agree to accept the Takeover
Offer once received. Following these lock up commitments being received, AXG
will launch the Takeover Offer, which will be conditional upon 90%
acceptances and other conditions customary in a full takeover offer.
If the conditions described above are not satisfied, there is a risk the
Takeover Offer will not be completed or successful (as the case may be).
Once the Takeover Offer is launch, subject to the conditions being satisfied
or waived, CRP expects the Takeover Offer to be completed within two to three
months. If the Takeover is not successful, CRP's Board will consider
alternative capital raising options.
Current Status of the Offer
Investor Share CRP has entered into a binding subscription agreement with
the Investor who has agreed to subscribe for the Investor Shares on the terms
noted above and as previously announced to the market on 4 March 2016.
New Share CRP has entered into legally binding agreements with qualified
investors to subscribe for 1,133,333 Shares at $0.006, being NZ$6,800 in
aggregate.
The Share Issue is also currently being marketed to other non-retail
investors. CRP has recently been engaging with a number of other potential
investors. Of which certain investors have expressed interest in investing
in the New Shares.
The Share Issue will be an unregulated offer of financial products under the
Financial Market Conducts Act 2013 (Act) and as such, retail investors may
not participate. The Share Issue is an offer of the kind referred to in
Schedule 1 to the Act and will only be made to persons that come within a
category of investor specified in that Schedule 1.
At the time of any allotments under the Share Issue, CRP will make a market
announcement detailing the allotment in accordance with the Rules.
It is not intended that any related parties of CRP will subscribe for the New
Shares. While the Investor currently holds 58,333,333 Shares (being 11.735%
of all Shares), 16,666,666 of these Shares (3.353%) are paid up and therefore
the remaining Shares are unpaid and do not presently confer voting rights.
Accordingly the Investor is not currently a "Related Party" as that term is
defined in the Rules.
Effect of the Share Issue
Assuming the Share Issue is fully subscribed (including the Investor Shares),
the number of Shares on issue will increase by 41.91%.
Dilution Effect of the Share Issue
A consequence of the Share Issue is that dilution will occur in respect of
current CRP shareholdings. The following table illustrates a dilution
scenario for a shareholder (ABC Ltd) who holds 10 million Shares, does not
participate in the Share Issue, and where all New Shares and Investor Shares
are issued.
Current number of Shares on Issue 497,073,181
Shares issued under the Share Issue 208,333,334
Total Shares on issue post-Share Issue 705,406,515
ABC Ltd pre-Share Issue percentage holding 2.011%
ABC Ltd post-Share Issue percentage holding 1.417%
Contact Details
The contact details for delivery and acceptance of a written request under
section 121 of the Companies Act 1993 are:
Chatham Rock Phosphate
Level 2
50 Customhouse Quay
Wellington 6011
Attention: Matt Yates
Directors' Certificate
We certify that in our opinion, the terms of the Offer:
o are fair and reasonable to shareholders of CRP; and
o are in the best interests of shareholders of CRP,
on the following ground
o CRP has a continuing need for new capital to develop its business and to
complete the Takeover Offer as outlined in this announcement;
o the Share Issue is payable in cash that CRP can use as working capital; and
o the share price is substantially similar to the current market price for
Shares which at the date of this certificate is $0.007.
Signed by the Directors of Chatham Rock Phosphate Limited:
Jill Elizabeth Hatchwell
Robert Mark Goodden
Robin Keith Halcro Falconer
Christopher David Castle
Linda Jane Sanders
Glossary
In this announcement:
Act means the Financial Markets Conduct Act 2013.
Board means the board of directors of CRP.
CRP means Chatham Rock Phosphate Limited (NZX Code: CRP).
NZX means NZX Limited.
Pre Break Announcement means an announcement released to the markets operated
by NZX that complies with Rule 10.2.
Rules means the listing rules of the NZAX market operated by NZX.
Shares means ordinary shares of CRP.
End CA:00281007 For:CRP Type:GENERAL Time:2016-04-19 08:40:31
