PERTH (miningweekly.com) – Diversified major Rio Tinto on Thursday said that it would ‘consider its options’ regarding the proposed A$476-million capital raise by uranium miner Energy Resources of Australia (ERA), after the Australian Takeovers Panel declared unacceptable circumstances.
ERA shareholder Zentree Investments in November made an application to the Takeovers Panel to halt a fully underwritten 6.13-for-1 pro-rata renounceable entitlement offer by ERA, after Rio, which holds a 69.4% interest in ERA, said that it would subscribe for some A$326-million worth of shares under the entitlement offer.
In its application, Zentee claimed that minority shareholders were not being given "reasonable or equal opportunity" to participate in the raising, with the benefits of the raising flowing towards Rio.
Zentree also said that there had been inadequate disclosure as to the need, size and urgency of the entitlement offer, and that there was no "serious dispersion expectation for the entitlements or the new shares".
The Takeovers Panel this week declared "unacceptable circumstances", citing the impact that the raising would have on the potential control of ERA.
The Panel ordered that Rio would not be able to compulsorily acquire shares in ERA as a result of the entitlement offer, without shareholder approval, and that the underwriter could not rely on any right it could have to terminate or comply with its obligations under the underwriting agreement as a result of the Panel’s orders.
Furthermore, the entitlement offer has been postponed by 20 business days allowing further disclosures to be made.
ERA for its part has rejected suggestions that any potential conflict of interest had not been "sufficiently managed" during the process of developing a funding solution for the rehabilitation of its Ranger project area, in the Northern Territory.
However, the company said that it would not seek a review of the Panel’s decision, on the basis that the entitlement offer was proceeding.
Rio’s CEO of Energy & Minerals, Bold Baatar has meanwhile said that the company will consider the Panel’s judgment before determining its next steps.
“Rio agreed to fully subscribe to and underwrite an entitlement offer in the absence of any other commercially viable solutions being available to ERA for the rehabilitation of the Ranger project area.
“We will now consider our options in light of the Panel’s orders so that ERA can fulfill its important rehabilitation obligations and commitments to the communities in which it operates and relevant authorities.”
ERA is required to end mining and processing activities at Ranger by January 2021, and to complete final rehabilitation by January 2026.