Kinross Won't Raise Takeover Bid for Bema Despite Opposition
By The Canadian Press
21 Jan 2007 at 01:40 PM EST
resourceinvestor.com
TORONTO (CP) -- Kinross Gold Corp. [TSX:K; NYSE:KGC] will not raise its takeover bid for Bema Gold Corp. [TSX:BGO; NYSE:BGO] despite opposition from Bema's second-largest shareholder, which believes the C$3.6-billion offer undervalues the Vancouver bullion producer.
Tradewinds Global Investors LLC plans to vote against the friendly takeover agreement struck in November, unless the offer is raised by at least 10%.
In an interview with the Globe and Mail on Friday, Kinross president and chief executive officer Tye Burt rejected the Los Angeles investment firm's demands ''to extract an extra pound of flesh.''
Burt said the Tradewinds opposition is ''an isolated occurrence,'' adding that Kinross has ''absolutely no intention of raising the offer in response.''
Canada's third-largest gold producer is offering 0.4447 of a Kinross share plus one Canadian cent for each Bema share. Bema shareholders are slated to vote on the deal at a special meeting Jan. 30 in Vancouver. Two-thirds of shareholders must vote in favour of the takeover in order for it to proceed.
Tradewinds, a unit of Nuveen Investments Inc. of Chicago, plans to vote its 31.9 million Bema shares against the transaction. The firm controlled 6.6% of Bema's outstanding shares in September, according to a regulatory filing.
''The offer undervalues the assets,'' Tradewinds gold analyst Nathaniel Velarde told Bloomberg News.
''There are not too many properties out there or gold companies out there with the reserves and resource base, and the potential to grow that resource base that Bema has. Bema is a scarce property in a consolidating gold market.''
By combining Kinross's mines and development projects in Brazil, Chile and the United States with Bema's own South American operations and large Kupol project in Russia, the new company hopes to boost production from 1.8 million ounces of gold in 2006, to 2.8 million ounces by 2009.
Burt said Toronto-based Kinross's bid represents a full and fair price for Bema. If it were not, a competing takeover offer would have emerged by now.
''We paid as much as we could pay. It's dilutive to our cash flow and earnings for the first two years and we don't feel we can go beyond that. Frankly, Bema did a good job negotiating and got a good deal for their shareholders,'' he said.
Clive Johnson, Bema's chairman and CEO, spoke with Tradewinds' executives this week. His attempts to allay their concerns were unsuccessful.
''They are the only significant shareholder I am aware of that are against the deal,'' Johnson said.
Other major Bema shareholders include New York hedge fund Paulson & Co., which owns about 4.7% of Bema's stock. Paulson did not return phone calls Friday, but sources told the Globe the hedge fund has indicated a positive response to the deal.
Of the votes cast so far, which represent 18% of Bema's outstanding shares, 96% have voted in favour of the takeover.
If the merger is approved, Johnson is poised to control and lead a new exploration company, B2Gold, that will include some of Bema's exploration assets in Russia and Colombia. Kinross will own 9.9% of B2Gold with an option to increase that stake to 19.9% and a right of first refusal on joint venture projects in Russia.
Tradewinds objects to Johnson's venture because it believes all of Bema's exploration assets should remain in shareholders' hands.
Both Burt and Johnson said the B2Gold venture is designed to leverage Bema's success at exploring and operating in Russia, where bureaucratic and cultural hurdles have proven challenging for foreign mining companies.
© The Canadian Press 2007 |
