takeover target?, page-6

Old interesting article on why Uranium ONE had to sell down its shares in PDN in 2010....they basically decided to undertake a reverse merger with the russian ARMZ.....and as they had a mine site in Australia.....there were concerned Paladin would lobby with the FIRB to block their merger here....so in effect they dumped the stock to avoid the antagonising paladin management.....read the quote their CEO said below on Paladin. I reckon they will be back at some point!

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The Russians take over Uranium One

[miningmx.com] -- URANIUM One has sold its shares in Australian uranium producer Paladin Energy but has not given up interest in the company.
That message came through loud and clear from Uranium One CEO Jean Nortier speaking on the conference call concerning the latest deal with Russian state uranium company JSC Atomredmetzoloto (ARMZ).
In what amounts to a reverse takeover Uranium One is buying 50% stakes in two more uranium mines in Kazakhstan from ARMZ which will then inject its 50% shares in the mines plus $610m in cash into Uranium One.
The end result is that ARMZ will control Uranium One holding at least 51% of the stock.
As part of the deal Uranium One reported it had recently sold “substantially all of its previously acquired shares of Paladin Energy.
“The sale proceeds will supplement the capital resources available to the company for the cash outflows contemplated by the proposed transaction.”
Uranium One bought a 3% stake in Paladin during late April and early May prompting speculation about a possible takeover bid for Paladin in co-operation with ARMZ.
Paladin runs two operating uranium mines - Langer Heinrich in Namibia and Kayelekera in Malawi – and has been by far the most successful new entrant to the uranium market over the past seven years.
Asked to elaborate on the Paladin issue during question time on the conference call Nortier commented, “both Uranium One and ARMZ are in favour of investing in uranium ventures in Africa where Paladin is a company with producing assets.
“In particular Paladin owns some of the more attractive assets in Namibia.
“We sold the shares because we have to get FIRB (Foreign Investment Review Board) approval and we want to present a clear picture to them.
“We do not want our friend Mr Borshoff (Paladin CEO John Borshoff) making comments at FIRB level,” Nortier commented.
FIRB examines proposals by foreign interests to undertake direct investment in Australia and makes recommendations to the Australian Government under its foreign investment policy.
In a statement released on April 30 reporting the first purchase of Paladin shares by Uranium One, Borshoff highlighted the link to ARMZ which, at that stage, was the largest shareholder in Uranium One holding a 23% stake.
A Paladin statement issued on Wednesday said the company welcomed the decision by Uranium One to sell its interest in Paladin.
The statement added, “this leaves Paladin as the only fully independent, publicly listed pure play uranium producer in the world.
“With its clear strategy and proven ability for growth Paladin remains ideally positioned to enhance its position as a major player in the global uranium supply sector.”
Uranium One needs FIRB approval for the ARMZ deal because it is in the process of developing the Honeymoon Uranium project in South Australia.
The deal with ARMZ is subject to a number of approvals and conditions precedent including a vote in favour by the minority shareholders in Uranium One.
It could also be affected by the course of action taken by Japan Uranium Management Inc (JUMI).
This consortium injected C$269m into Uranium One in January in return for the issue of unsecured convertible debentures which will automatically convert into 117m Uranium One shares on receipt of required Kazakh regulatory approval.
That approval has yet to be given and, according to a Uranium One statement released last December, if it is not granted it will cause the debentures to be redeemed at par plus accrued and unpaid interest.
Asked to clarify this situation Nortier replied, “We have assumed JUMI will ask to be cashed out but I have to ask you guys to be patient on this one because we are in discussions with JUMI on what direction they want to go on the matter.
“JUMI is able to make a competing offer to ARMZ if it wants to,” he commented.
Nortier said the cash being injected into Uranium One by ARMZ should be viewed as a “change of control premium” and it would be paid out to minority shareholders in the form of a special cash dividend of at least US$1.06 a share.
He added that, should JUMI opt to keep its debentures, then the agreement with ARMZ provided for “consequential increases in the cash to be contributed by ARMZ to Uranium One, shares issued by Uranium One to ARMZ and dividends paid to minority shareholders.”
The deal will increase Uranium One’s steady state annual production from its Kazakhstan mines by about 60% from 10m pounds (lbs) to about 16m lbs of U3O8.
Total cash costs per pound of U3O8 sold were expected to remain below US$20/lb “on a consolidated basis.”