Alto Metals Ltd (ASX:AME) directors have unanimously recommended that shareholders accept the off-market takeover bid by 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 6.5 cents per share, as well as all 78,842,567 options in the company.
After Goldsea today submitted a supplementary bidder’s statement, the Alto directors have reversed their previous decision with the new statement being more favourable.
On April 20, 2020, Alto issued its Target's Statement, recommending that shareholders and optionholders reject the offers based on a number of factors.
The key factor was that the Alto directors did not consider that there was a reasonable basis for believing that the offers would be capable of completing.
This was as a result of Goldsea declining to waive its 90% minimum acceptance condition (on a fully diluted basis), and the directors’ belief that, on the basis of its conduct to date, Adaman Minerals Pty Ltd, the holder of 10.3% of shares on issue, was unlikely to be minded to accept the offer at that time.
Today’s supplementary statement outlines that Goldsea intends to waive all conditions to the offers, excluding FIRB approval, if the aggregate of its relevant interest in shares and acceptances received under the offer is at least 50.1% of shares by no later than 7pm (AEST) on May 31, 2020.
Alto’s non-executive chairman Richard Monti said directors had spent a significant amount of time giving careful consideration to the offers.
This included an assessment of the potential future risks and rewards for shareholders and optionholders of staying independent and progressing the exploration of the Sandstone Gold Project alone or with a third party.
He said while directors continued to believe in the exploration potential of the Sandstone project, they considered the offers provided shareholders and optionholders with an attractive opportunity to realise value for their investment in cash.
This was particularly the case in light of the uncertainty seen in current global equity markets and the requirement that Alto would need to raise immediate capital in the near-term to fund exploration and working capital.
In a letter to shareholders, Monti said: “Your directors intend to ACCEPT the offers for all Alto shares and Alto options they hold or otherwise control, in the absence of a superior proposal.
“The Alto directors remain of the view that it is most likely that Adaman is not minded to accept the share offer at this time, based on Adaman's conduct to date. However, Alto has not received confirmation of Adaman's intentions as at the date of this Supplementary Target's Statement.”
Offer represents premium price
The chairman said the offers represented a premium to the trading price of shares leading up to the offers:
- 103% premium to the ASX closing share price of 3.2 cents on February 20, 2020, being the last trading day prior to the announcement of the intention to make the offers;
- 93% premium to the one-month VWAP to February 20 of 3.4 cents;
- 86% premium to the three-month VWAP to February 20 of 3.5 cents;
- 83% premium to the six-month VWAP to February 20 of 3.6 cents; and
- 81% premium to Alto's capital raising price of 3.6 cents per share in May 2019.
Conditional on FIRB approval
The offers remain conditional on Goldsea receiving FIRB approval.
Goldsea has agreed with FIRB to a voluntary one-month extension until May 27, 2020, for FIRB to continue its process.