In the lead-up to this meeting, Aspire has been advised by independent expert BDO Corporate Finance (WA) Pty Ltd that the share placement is “not fair but reasonable” to minority shareholders in the absence of a superior offer.
Largest shareholder Mongolian entrepreneur Mr Tserenpuntsag has agreed to subscribe for shares in the company through a placement to increase his ownership interest from 27.5% to 51%.
This placement is priced at 2.1 cents per share, representing a significant premium of 28% to Aspire’s 30-day VWAP and 40% premium to the closing price of shares on the trading day prior to the placement announcement on September 6, 2019.
Aspire’s non-aligned directors, excluding those nominated by Mr Tserenpuntsag, continue to unanimously recommend that shareholders approve the share placement.
These directors intend to vote the shares they own and control in favour of the placement, in each case in the absence of a superior proposal.
The pure-play metallurgical coal project developer with projects in Mongolia aims to begin producing coking coal early from its world-class Ovoot project in the country’s north through the Ovoot Early Development Plan (OEDP).
This OEDP is focused on a truck and rail operation to annually deliver up to 4 million tonnes to end markets in China and Russia.
Operational expansion can occur following the construction of the Erdenet-to-Ovoot Railway, which is being progressed by Aspire’s subsidiary, Northern Railways LLC.
Support for plan
Mr Tserenpuntsag has provided the company with a conditional letter of intent to support the first-stage OEDP development by way of:
- Provision of a corporate guarantee for up to $100 million to support future project financing for the OEDP; and
- A commitment to pro-rata equity contributions to maintain a 51% shareholding in Aspire alongside all shareholders to fund Ovoot into production.
If the share placement completes, Mr Tserenpuntsag’s shareholding in Aspire will increase to 51% (before dilution) having invested an estimated $50.2 million in the company.
This significant personal investment, and his stated intention to provide ongoing financial and strategic support, is considered pivotal to delivering Aspire’s stated objective of unlocking early coking coal production.
Option exercise proposed
As part of approving the share placement, shareholders are also being asked to approve the exercise by Mr Tserenpuntsag of the 153.3 million 1.8 cents options that he holds.
In the event that these options are exercised, this will add a further $2.75 million in cash to Aspire’s balance sheet and increase Mr Tserenpuntsag’s interest in the company to a maximum of 52.5%.
This will be in the event that the holders of the remainder of the 1.8 cents options do not exercise any of these options prior to their expiry on December 11, 2019.
In the event that Mr Tserenpuntsag’s interest is diluted below 51% from exercise by other holders of the 1.8 cent options, the company is also seeking approval from shareholders to provide a placement at 2.1 cents to maintain the interest at 51% post-dilution.
Aspire’s 2019 Annual General Meeting will be held on November 29, 2019, in The London Room, Ground Floor, London House 216 St Georges Terrace, Perth, WA, commencing at 2.30 pm (AWST).