Russian group Armz has lowered its offer for uranium miner Mantra Resources by 12.3% to about $944 million after last week pulling an initial higher offer because of the Fukushima nuclear crisis in Japan.
Armz is now offering Mantra shareholders $7.02, comprising $6.87 cash and an unfranked cash dividend of 15c, down from its original offer of $8 cash, or $1.02 billion, according to a statement released yesterday.
The new lower offer has the support of Mantra’s board, and its major shareholder Highland Park SA, which owns 13.5%, subject to an independent expert deeming it fair. The deal is expected to close in July.
Mantra (whose main resource is the Mkuju River project in Tanzania), has seen its shares sold down heavily in the wake of the Fukushima nuclear reactor disaster.
It wasn’t alone, but Armz used the bad news to withdraw its $8 offer, citing the difficult market conditions.
A week later, events in Japan seem to be more under control at Fukushima and the world has rediscovered its optimism, so upped popped the Russian company yesterday with the new, cheaper offer.
Mantra traded at $5.29 on Monday, giving it a market value of about $711m, down from $7.84 before the events in Japan.
Yesterday the shares bounded 26.3% or $1.39 higher to $6.68 with the Russian bidder now back in the game.
That was after investors drove Mantra shares to as low as $4.27 after last Thursday’s withdrawal.
Mantra and Armz yesterday explained the return in this way:
"Mantra Resources Limited and JSC Atomredmetzoloto have revised the transaction (‘Revised Transaction’) in relation to the Scheme Implementation Agreement (‘SIA’) that was entered into by Mantra and ARMZ on 15 December 2010.
"On 17 March 2011, Mantra announced that ARMZ considered that a condition precedent in the SIA relating to material adverse change was not capable of satisfaction. ARMZ however indicated that it was willing to explore how the transaction contemplated by the SIA could proceed by way of an alternative approach.
"After consideration of all available options, and advice received from its financial and legal advisers, Mantra has agreed to the Revised Transaction with ARMZ."
The companies said the lower price "values Mantra at approximately A$1.02 billion and represents:
- A 32.7% premium to Mantra’s closing share price of A$5.29 on the ASX on Friday, 18 March 2011, the last trading day prior to the announcement of the Revised Transaction; and
- A 14.4% premium to Mantra’s volume weighted average price of A$6.14 over the 5-Day VWAP, being the period since the natural disaster in Japan occurred.
"The Scheme Consideration and the Special Dividend will be paid to Mantra shareholders simultaneously upon implementation of the Scheme. After taking into consideration the current global equity market conditions and increased uncertainty for the uranium sector, other potential options available to the Company and the advice of its financial and legal advisers, the Mantra Board has concluded that the Revised Transaction is in the best interests of Mantra shareholders."
So all over, bar the shouting, and the next disaster?
Ah, not quite, Mantra directors also said: "The Total Cash Payments of A$7.02 allows Mantra shareholders to realise value for their Mantra shares in the near term and, in the view of the Mantra Board, is compelling when taking into consideration the increased level of project development risk and uranium sector risk.
"In addition, there is a greater level of certainty with respect to the Revised Transaction being completed, due to the reduced conditionality of the deal including removal of the material adverse change clauses."
So it would seem Armz will have to stick around if there is another disaster in Japan, or elsewhere.
