Googled this piece tonight , and seems to explain things.
As far as I can see , Creat are exercising an option to aquire up to 20 % of Galaxy, as per a funding deal done last year at a set cost of 80 cents per share.
It does not mean that creat are taking over galaxy, my limited understanding is that a reverse takeover is an AIM technical term as explained below.. (UNLESS that last line means something like a real takeover is what's planned , but at what cost ?? )
Probably raises more questions. I think GXY management should make a clear and simple statement about exactly what is going on...
Hope this helps, and gotta say that I'm somewhat dissapointed with this developement, but it looks like that was the price to pay, when raising money during a very trying period last year, and if it means that we go full steam ahead, then so be it.....
Creat Resources raises 4.8 million to help finance acquisition of 19.9% stake in lithium play Galaxy Resources
Creat Resources raises 4.8 million to help finance acquisition of 19.9% stake in lithium play Galaxy Resources Creat Resources (AIM: CRHL) announced a conditional placing of 96 million shares at a price of 5 pence per share to raise 4.8 million before expenses to partially finance a proposed transaction that will see it acquire a 19.9% interest in Australian listed lithium developer Galaxy Resources (ASX: GXY).
The deal is effectively being brokered by Creat Resources largest shareholder, Creat Group Limited (Creat Group), a large, diversified investment group based in Beijing. Creat Groups business interests include agriculture, biotechnology, electrical switchgear manufacturing and minority interests in banking and property development.
In August 2009, Creat Group entered into an agreement with Galaxy Resource to subscribe for 19.9% of the company at a price of A$0.88 per share, or A$26 million. Creat Group also agreed to provide a seven year, A$130 million debt facility to assist Galaxy in developing both the Mt Cattlin Spodumene and Jiangsu Lithium Carbonate Projects.
In the announcement today, Creat Resources confirmed that Creat Group was proposing that Creat Resources would subscribe for the 19.9% stake in Galaxy Resources. As the transaction is considerably larger than Creat Resources market capitalisation, it would constitute a reverse takeover under AIM rules.
Creat Group has also entered into a put option arrangement with each of the Subscribers whereby each Subscriber will have the right to require Creat Group to purchase their shareholdings (to the extent the Ordinary Shares have not been traded or otherwise dealt with) at 12 months after completion of the Placing, at 6 pence per Ordinary Share, if the market price of an Ordinary Share at the Exercise Date is less than 6 pence.
To fund and complete the Proposed Reverse Takeover, Creat Resources also said that it will need to raise further funds by way of an additional placing
GXY Price at posting:
42.0¢ Sentiment: LT Buy Disclosure: Held
