taken from Joburg Sunday times;Australian Takovers Panel gags...

taken from Joburg Sunday times;


Australian Takovers Panel gags Lephalale players

by Moyagabo Maake, 12 May 2013, 09:04

WHAT was intended to be an investment agreement to develop a strategic mine in Lephalale, Limpopo, has turned into a fully fledged hostile takeover offer.

Now it is pulling the target board apart, and it has landed both parties with gagging orders.

On Monday last week, the Australian Takeovers Panel placed gag orders on Firestone Energy and the Waterberg Coal Company (formerly Range River Gold) until the panel has considered Firestone’s application to compel WCC to change its bid.

Waterberg had offered 1.25 shares for every 20 Firestone shares that it did not already own, but Firestone wanted that changed into a cash offer of not less than 1.8 Australian cents (about 17 South African cents at Thursday rates) a share.

That would be equal to the amount paid to former major shareholder Sekoko Resources, a local company with diverse mineral rights from coal to platinum group metals in Limpopo.

“Firestone seeks final orders including an order that [WCC] varies its bid to include an alternative cash consideration equivalent to the value of the consideration received by Sekoko,” Allan Bulman, a director of Australia’s takeovers panel, said last week.

Professional services firm Deloitte found that the takeover offer was “unfair and unreasonable” because it valued Firestone — a junior mining exploration company listed on the ASX and JSE — at significantly less than its estimated fair value of $0.010 (9 SA cents) to $0.013 (12 cents).

The proposed takeover has led to a flurry of corporate activity, with Firestone calling on shareholders to reject the offer since it was first mooted.

It was also not clear how its South African shareholders would benefit from the share swap offer as WCC is not listed on the JSE, but Business Times understands that it is getting ready to list in the coming weeks.

Stephen Miller, WCC executive director, said that he knew the board was not unanimous in its view on the offer.

“We know that this is not the actual position,” he said. “Be that as it may, so far 44% of Firestone shareholders have accepted the WCC bid.”

WCC, which is a shell company with three exploration licences covering gold, granite and copper in south Australia, and recently came out of external administration, got its foot in the door through its acquisition in December of Ariona Company, a Monaco-registered consortium of global institutional and private investors hunting for mining opportunities.

In July, Ariona entered into an investment agreement with Firestone, providing $40.7m in funding for the development of the Waterberg Coal project, a joint venture between Firestone and Sekoko, in Lephalale.

• This article was first published in Sunday Times: Business Times