Some investors had voiced concerns about the initial C$501 million deal, including Anson Funds, which said the offer “undervalued” the company.
Swiss investment company Pala Investments has increased its acquisition offer for Cobalt 27 Capital (TSXV:KBLT,OTCQX:CBLLF) by C$30 million.
Pala Investments, which already owns 19 percent of the Toronto-based company, is now offering C$4 per share, up from C$3.57. Shareholders will also receive one share of a newly established company called Nickel 28 Capital with an implied value of C$1.92.
The C$5.92 per share deal represents a 71 percent premium to Cobalt 27’s closing price on the TSXV on June 17, the day before the original offer was announced, and values the company at C$506.2 million.
“We are pleased to provide these significantly improved transaction terms to Cobalt 27 shareholders on a best and final basis. We believe that these terms are responsive to shareholder feedback and fully value the company,” said Stephen Gill, managing partner of Pala.
Some investors had voiced concerns about the initial C$501 million deal, including Anson Funds, which at the time said the offer “undervalued” the company.
On Tuesday (October 1), the shareholder, which has not disclosed the interest it holds in Cobalt 27, said it is supportive of the improved transaction.
The new deal will also see Pala Investments repay Cobalt 27’s net debt, leaving Nickel 28 with no corporate debt and funding of US$5 million in cash upon closing.
Cobalt 27 holds approximately 2,904 tonnes of physical cobalt at its warehouses in the US and Europe, as well as 11 royalty and streaming arrangements with miners such as Vale (NYSE:VALE), RNC Minerals (TSX:RNX,OTCQX:RNKLF) and Australian Mines (ASX:AUZ,OTCQB:AMSLF).
The soon-to-be created Nickel 28 will hold Cobalt 27’s joint venture interest in the Ramu nickel-cobalt mine, as well as the company’s royalty portfolio on future projects. Its royalties include the Turnagain and Dumont royalties and certain equity positions.
Cobalt 27 started trading on the TSX Venture Exchange in June 2017 after a C$200 million initial public offering. Shares were offered at C$9, and at the time it was the largest debut in Canada since 2012.
A decline in cobalt prices and oversupply worries have impacted investor sentiment toward the sector this past year, hurting the share prices of junior miners.
On Wednesday (October 2), shares of Cobalt 27 were trading at C$4.25 in Toronto.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.