low shot at low ball ! --------------------------------------------------------------------- Padbury urges shareholders to reject "low ball" FEL offer.
By: Esmarie Swanepoel 23rd September 2010
PERTH (miningweekly.com) - Junior miner Padbury Mining, which is the subject of a hostile takeover bid by FE Limited (FEL), urged shareholders of Thursday to reject what it described as FEL's "low ball" offer
FEL has offered one of its own shares, along with 1c in cash, for every 13 Padbury shares held. But its bid was also associated with a controversial move to replace Padbury directors Luke Innes, Gary Stokes and Colin Stirling, with sympathetic nominees, namely Tony Sage, Mark Gwynne and Paul Kelly.
Padbury shareholders recently voted against the move, which Padbury claims would have enabled FEL to gain control without paying for it.
In its newly published 'target's statement', Padbury chairperson John Saunders again asserted that FEL was seeking to gain control of Padbury without paying a premium. "On a number of methods, the implied value of the FEL offer is at a discount to Padbury's share price, and FEL should not be permitted to gain control of your company without paying a premium for control," he argued.
Saunders further reminded shareholders that Padbury was poised to deliver a Joint Ore Reserves Committee (Jorc) resource at its Peak Hill project, by the end of 2010. This development, he said would provide visibility of the company's potential and its progression from a junior explorer to a mining entity.
"The offer is opportunistically timed to take advantage of Padbury in the period prior to realising the potential of its assets and projects," Saunders averred.
It was further noted that, if FEL were to acquire Padbury through the current offer, Padbury shareholders would only hold 48% of the combined company. This, despite Padbury's assertion that its overall asset contribution would be larger.
Saunders further expressed his concern regarding FEL's ability to arrange iron-ore offtake agreements with China, considering that Sage had initiated litigation against a major Chinese State-owned enterprise.
Earlier this month, Sage, through ASX-listed Cape Lambert, filed legal action against Metallurgical Corporation of China to recover a A$80-million payment from an iron-ore asset sale.
"Padbury is of the view that the litigation initiated by Sage may adversely impact FEL's ability to arrange iron-ore offtake agreements with Chinese investors. On the other hand, Padbury has maintained strong relationships with China, having recently signed a non-binding memorandum of understanding with a Chinese investor regarding the injection of capital," said Saunders.
He noted that with the company's current strong management team, it had the experience, expertise and asset base to deliver value to shareholders.
"Your directors urge you not to dilute your exposure to that value by passing control of Padbury to FEL at a price that does not adequately reflect Padbury's assets and its potential,"Saunders added.
(20min delay)