Australian Iluka poised for €130m Kenmare Resources bid
Iluka Resources, the €2bn Australian mining firm, is thought to be preparing to launch a new bid to take over €130m valued Irish resources group Kenmare, according to financial sources. Over the last decade Kenmare has developed one of the biggest ilmenite mines in the world at its Moma site in Mozambique. Ilmenite is used as a white pigment in the paint industry.
Iluka, which is advised by Goldman Sachs and A&L Goodbody, is understood to be close to completing its due diligence on Kenmare, with key executives visiting Dublin and the Moma mine in Mozambique. Last year, Iluka proposed an all share deal to buy Kenmare worth the equivalent of 12p per share. Although Kenmare's share price jumped last week, any new offer is likely to be significantly lower than the previous approach. Kenmare, which declined to comment, is being advised by Rothschild and McCann Fitzgerald.
Michael Carvill's Kenmare is said to be close to a deal to refinance part of its $350m Moma loans, split between senior and junior debt. Some $80m needs to be repaid in December with senior and junior lenders jockeying for position and negotiating among themselves before turning to Kenmare. Key lenders in this group are primarily state backed banks including the European Investment Bank, German state bank KFW, Dutch group FMO, the African development Bank and Barclays ABSA.
Apart from its debt situation, Kenmare has been savaged by the markets as prices for its key ilmenite product tumble. Current ilmenite prices are as low as they were during the financial crisis in 2009. Ilmenite prices have been pounded due to a glut of supply in China. Ilmenite is a by-product of some iron ores heavily mined by the Chinese.
Analyst TZMI is forecasting an improvement in the market. It is believed that third parties, including private equity and institutional buyers may be looking at investing in the sector ahead of any potential uptick in prices.
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