Alto Metals Ltd (ASX:AME) directors have unanimously recommended that shareholders reject the unsolicited, off-market, cash takeover offer from Goldsea Australia Mining Pty Ltd, a wholly-owned subsidiary of Shandong Goldsea Group Co Ltd.
Goldsea made the offer on February 21 to acquire all fully paid ordinary shares in Alto for consideration of 65 cents per share, as well as all 78,842,567 options in the company.
The share offer includes a condition that, at the end of the offer period (7pm AEST on May 8, 2020), Goldsea has a relevant interest in at least 90% of the Alto shares (on a fully diluted basis).
The option offer is subject to a condition that the share offer is declared unconditional in all respects.
On April 14 and 15, 2020, Adaman Minerals Pty Ltd bought an aggregate of 30.325 million Alto shares on market, representing 10.3% of shares on issue.
Adaman also provided Alto with a confidential funding proposal, which the Alto board declined based on the unacceptable terms offered.
The company requested formal confirmation of Adaman's intention in respect of the Goldsea offer but has not received this as yet.
On the basis of the actions of Adaman to date, the Alto board considers that it is unlikely that Adaman will accept the share offer at this time, which means it will not be possible for the minimum acceptance condition of the Goldsea offer to be satisfied.
Alto also requested that Goldsea consider waiving its minimum acceptance condition but Goldsea has declined.
Consequentially, the Alto board considers that it has no reasonable basis to assume that the conditions to the Goldsea offers will be satisfied and for this reason, among others outlined in the target’s statement, recommends that Alto shareholders and option holders reject the current Goldsea offers.
The directors unanimously recommend offers are rejected given that:
- The offers are subject to several conditions which are unlikely to be satisfied,
- If a shareholder accepts the offers, they are unable to accept a superior proposal if one emerges, and
- There may be tax implications for a shareholder who accept the offers.
Directors may change their recommendation in the event of a variation to the offers and recommend shareholders read the target’s statement in full along with the bidder’s statement received from Goldsea and seek financial or legal advice if needed.