double dutch??

"Mixed signals from Emperor’s Dutch invader
By: Peter Gonnella
Posted: '27-JUL-04 09:00' GMT © Mineweb 1997-2004



PERTH (Mineweb.com) -- The faceless owners of Amsterdam-registered Arduina Holdings, the new shareholder of DRD takeover target Emperor Mines [ASX:EMP], appear to be playing games with the market.

Arduina emerged as the mystery buyer of Emperor stock this month and has built up a 15 percent interest in the Aussie-based Fijian gold producer, of which DRD is entitled to an essentially presiding 44.7 percent stake.

It seemed a wacky move by the Dutch holding company as the on-market raid came well after the Emperor board had recommended DRD’s five-for-22 shares offer and after DRD was already at around 36.5 percent.

However, not only are the boys behind Arduina – who in the Emperor investment is being represented by a law firm in Kazakhstan, Michael Wilson & Partners, who also has Swiss business connections – yet to reveal their identities despite Emperor’s efforts to find out, but they might also be having a good old laugh sending mixed messages to Emperor regarding their strategy, perhaps a product of enjoying a few too many hours in the famous Amsterdam cafes.

Arduina has thrown three wickedly tantalising curve balls. The first is it has advised it wants another five percent of Emperor for a total of 20 percent, which would trigger takeover provisions of Aussie corporate regulations, though, secondly, in the same inhalation it has indicated it doesn’t have any intentions at this point of launching a takeover offer, and, thirdly, it wants to carry out due diligence on Emperor and after that consider purchasing more of its shares, indeed pointing to a possible rival bid.

Meantime, DRD responded today (Tuesday) with confirmation that its unconditional offer would definitely be closing this Friday, 30 July, barring “any automatic extension required by the (Aussie) Corporations Act”, leaving the dilemma for minority Emperor shareholders of whether to accept the DRD scrip, hang out for the potential of something higher from the Dutch and/or Swiss crew, sell on market, or be stuck with the perceived liquidity problems of an overhang in the stock.

At the moment Emperor has a market capitalisation of about A$100 million. Its share price, which has kicked again because of the renewed market expectations of a counterbid, is sitting at A$0.88, which is about the average price Arduina paid for its 15 percent (or A$15 million) block, and DRD’s offer is worth an equivalent of about A$0.74 (and values Emperor at about A$83.5 million) based on its lower closing share price on Nasdaq last night.

There is an unlikely scenario which some market observers are suggesting Arduina may be positioning for. That being that DRD may let the existing offer lapse, as it’s been declared final and therefore can’t be amended, and then make a fresh improved bid. Don’t like Arduina’s chances, especially if DRD creeps above 50 percent by the end of this week and wins effective management control.

Rather than worrying about trying to mount another bid for Emperor, a DRD spokesperson indicated to Mineweb this month that DRD might decide to just walk away with the cash if Arduina presented a sweeter alternative bid for Emperor, who overnight announced what DRD has continuously warned the Fiji miner might have to resort to if the South African-based gold group didn’t gain full ownership – a proposed significant rights issue (A$12.5 million) that will require shareholders including Arduina to fork out additional capital to retain the same shareholding.

It’s now up to Australia’s Foreign Investment Review Board to give its approval to allow Arduina to acquire a 20 percent holding in Emperor, whose directors’ hands are probably tied in terms of changing their recommendation until they learn who they’re dealing and what the new shareholders are hatching. And anyway, DRD will be directing the traffic and that won’t be towards tampering with the recommendation."