Northgate makes acquisition.......not surprising that they'd go after a producer with Kemess North situation.
Just posted the jist of news release....it's quite long.
Northgate Minerals Corporation Announces Friendly Proposal to Acquire Perseverance Corporation Limited to Create Leading Mid-tier Gold Producer
Ticker Symbol: C:NGX U:NXG
US$257 Million Transaction Adds Approximately 200,000 Ounces of
Annual Production through Two Australian Mines with Significant
Exploration Upside
Notice:
Conference Call and Webcast on Monday, October 29 at 10:00 am ET
Dial in: +1 416-644-3416 or 1-800-733-7571
VANCOUVER, Oct. 28 /CNW/ - Northgate Minerals Corporation (TSX: NGX, AMEX: NXG) ("Northgate") and Perseverance Corporation Limited (ASX: PSV) ("Perseverance") are pleased to announce that they have signed a Merger Implementation Agreement ("MIA") pursuant to which Northgate would acquire all outstanding securities and debt of Perseverance for cash consideration (the "Transaction").
The Transaction will create a multi-mine gold producer with over 430,000 ounces of estimated production in 2008 and significant free cash flow. Northgate's offer capitalises Perseverance at an Enterprise Value of approximately US$257 million (A$282 million).
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TRANSACTION HIGHLIGHTS
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Northgate and Perseverance have today entered into a definitive MIA that provides for the acquisition by Northgate of Perseverance. The Transaction will be implemented via schemes of arrangement between Perseverance and its shareholders and warrant holders (referred to in Australia as optionholders), respectively (the "Schemes"), and a resolution of holders of convertible subordinated notes to approve the early redemption of the notes. Under the Schemes, a wholly owned subsidiary of Northgate will acquire all of the outstanding fully paid ordinary shares in Perseverance and the company's warrants (referred to in Australia as options) will be cancelled. In addition, under the resolution of holders of convertible subordinated notes, the convertible subordinated notes will be cancelled. The Transaction is subject to certain conditions, including the approval of securityholders.
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Under Northgate's offer, Perseverance securityholders will receive:
- A$0.20 cash per ordinary share;
- A$0.08 cash for each of the Perseverance warrants issued as
part of the recent A$26.5 million placement; and,
- A$100,000 (face value) plus any accrued interest per
convertible subordinated note.
The Northgate offer of A$0.20 per share provides substantial value to
Perseverance shareholders and represents:
- a 37.9% premium to the Perseverance closing share price on
October 26, 2007 of A$0.145; and,
- a 37.1% premium to the one month volume weighted average price
of A$0.146.
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Northgate has also agreed to acquire all of Perseverance's existing debt from a major financial institution in Australia (the "Bank") amounting to US$30.6 million (A$33.5million) and is extending an additional bridging facility of up to US$22.8 million (A$25.0 million). Northgate has also agreed to acquire the Bank's exposure of approximately US$43.8 million (A$48.0 million) to Perseverance's gold hedges and subsequent to the close of the Transaction, Northgate will close out this hedge position.
Under the terms of the debt assumption and loan agreements, all debt held by Northgate will be in a first secured position and interest on the bridge financing will be deferred up to the date of successful conclusion of the Transaction or termination of the MIA.
The additional bridging facility eliminates any short-term requirement for Perseverance to raise further equity capital.
In the event that the Transaction does not close as a result of another person acquiring an interest in Perseverance of more than 20%, the Bank debt and bridging facility will become immediately repayable in full and Perseverance will be required to immediately close out the gold hedges.
In the event that the Transaction does not close for any other reason, Perseverance is required to repay the principal amount of all bridge financing plus accrued interest and fees within three months of the relevant termination date. The remaining Bank debt and the gold hedges will remain in place and subject to their current terms (although the Bank debt will be owned by Northgate, and Northgate will become the counterparty to the gold hedges).
Perseverance Directors have unanimously determined that the Transaction is in the best interests of securityholders and unanimously recommend that all Perseverance shareholders and warrant holders vote in favour of the Schemes and that convertible subordinated noteholders approve the early redemption of the notes in the absence of a superior proposal.
All Perseverance Directors intend to vote all Perseverance securities held or controlled by them at the time of the Scheme meetings in favour of the Schemes, in the absence of a superior proposal.
"We believe Northgate's offer takes into account the current status and value of the existing operations and strong exploration potential at Perseverance," John Quinn, Chairman of Perseverance, said.
"In addition to providing our shareholders with an attractive premium, I expect that the operational expertise and financial resources of Northgate should allow the assets to prosper going forward.
"Northgate has a plan to contribute the capital to fund the required development of Fosterville's underground infrastructure and to reinvigorate exploration on the Company's extensive tenements.
"The Northgate management team has a proven track record as strong operators and their team will provide the guidance necessary following the previously announced departure of Mark Mitchell, Perseverance's Executive General Manager," he said. |
