Perilya soars after board rejects CBH bid
business.theage.com.au
Shares in takeover target Perilya jumped today after the miner's board advised shareholders to reject CBH Resources' hostile $29.7 million all-scrip bid.
Shares in the base metals miner ended up 4 cents, or 25.8%, at 19.5 cents, while CBH's shares rose 0.1 cent, or 2.7%, to 3.8 cents.
Perilya said a merger with the fellow lead and zinc miner was unattractive because CBH had too much debt.
CBH had debt of about $190 million including convertible bonds at the end of September.
Perilya said CBH's offer was at a significant discount to the funds it will gain through a proposed placement to China's third largest zinc producer, Zhongjin.
If approved by Perilya shareholders at a general meeting in February, Zhongjin will take a 50.1% stake in the Perth-headquartered miner for $45.5 million in cash.
"By contrast, the offer by CBH at current share prices is at a significant discount to the proposed Zhongjin placement, and does not deliver immediate or certain cash to the company,'' Perilya chairman Patrick O'Connor said today.
"Given the current debt position of CBH, a merger with CBH would move Perilya into a net debt position with significant interest payments, during a time of depressed metal prices and volatile markets.''
Perilya managing director Paul Arndt the merger could save CBH around $70 million but it had failed to demonstrate how a merger would benefit Perilya shareholders.
"Under CBH's proposed merger, Perilya shareholders would be giving away half of their company while contributing more than 60% of the merged entity's metal production,'' Mr Arndt said. |
