Ormonde Mining has rejected a takeover approach from Almonty Industries after not one, but two proposals from the company. The company “is not confident that Almonty is capable of executing its proposal to acquire the Company for cash, even were it to make a proposal at a level which was capable of recommendation.”
Almonty’s initial approach came in March in the form of an indicative non-binding proposal to acquire all the issued and outstanding shares of Ormonde for GBP4.25 per share to be satisfied in new Almonty shares; shareholders would have been able to elect for a maximum of 50 percent of the offer consideration in cash. The second, which was announced on April 23, was an indicative non-binding, all-cash proposal for GBP4 per share, with a share alternative proposed.
On Wednesday, Ormonde provided a response to those proposals, listing a number of concerns regarding “the reported reserves, projected mine life, negative net cashflows from operations, and existing debt profile of Almonty and its operations.” The company also addressed concerns surrounding Almonty’s ability to provide funds on the “certain funds” basis required under the Irish Takeover Rules while also servicing its own debt of C$26.9 million.
Furthermore, Ormonde noted that the April proposal, including the GBP4 cash offer price, “is considered by the Board to substantially undervalue the Company and the Barruecopardo asset.”
Those concerns, coupled with the fact that board members of Woulfe Mining (CSE:WOF) recently unanimously decided to terminate an agreed merger with Almonty, prompted Ormonde to state that “it is not confident that Almonty is capable of executing its proposal to acquire the Company for cash, even were it to make a proposal at a level which was capable of recommendation.”
Ormonde also said Wednesday that it has finalized a financing agreement for its Barruecopardo project, making Almonty’s takeover offer not only unwanted, but also unnecessary. The company will gain a total of US$99.7 million from OCM Luxembourg Tungsten Holdings, and that amount will fully fund the development of the project. The company plans to present that offer for shareholder consideration at an extraordinary general meeting on May 19.
It’s not the first time
Ormonde also states in Wednesday’s release that this isn’t the first time Almonty has approached it, with the first time being back in 2013. That proposal was quashed under the Irish Takeover Rules, which state that the pursuer must either make an offer or announce that it did not intend to make an offer within a specified deadline.
Overall, the company is open to considering “[a]ny fully funded offer, presenting appropriate value and capable implementation in a reasonable time frame, forthcoming from any party.” Whether an offer like that will ultimately appear remains to be seen, but at this point it seems unlikely that Almonty will return to the table.
At end of day Wednesday, Ormonde’s share price was up 1.69 percent at GBP3. Almonty’s was flat at C$0.63.
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.