Under the proposed deal, Stellar shareholders would receive an aggregate 95.5 million Newfield shares, which equates to approximately 16.4 percent of the enlarged share capital. In total, Stellar shareholders would receive approximately 0.76 of a Newfield share for each Stellar share they hold.
The possible transaction implies an offer value of 9.77 pence per Stellar share for parties with rights and an offer value of 12.7 pence per Stellar share for parties with ordinary shares. Out of the 95.5 million Newfield offer shares proposed to be issued pursuant to the offer, approximately 47.3 million of those shares would be issued in respect of the Stellar shares currently in issue.
The basis for the possible offer is to merge the business interests of Newfield and Stellar in Sierra Leone, and bring the necessary funding to advance the high-grade and high-value Tongo-Tonguma project.
The boards of Newfield and Stellar believe that combining the two companies would create an enlarged and well-funded diamond development company focused on Sierra Leone. They believe that the merger would generate significant long-term value for the shareholders of both companies through bringing into commercial production the 4.5-million-carat Tongo-Tonguma project.
In addition to the possible offer, Newfield would commit to a two-tranche placement in order to raise a total of $10 million. The first placement would be a binding commitment to raise $7 million in funds and the second would raise $3 million. These tranches are represented by 35 million and 14 million Newfield shares, respectively.
The deal rests on the condition that Newfield secures underwriting for $30 million in funds to advance Tongo-Tonguma. Stellar’s share price spiked on the news, rising as high as 7.40 pence last Thursday.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.