US group Black Mountain Metals on Monday warned Poseidon Nickel that it would terminate its takeover proposal if the company pursued a “highly dilutive” capital raising.
This is in response to Poseidon’s request that the ASX halt trading in its shares to “discuss and announce a material fund raising”.
The private equity firm said that a fundraising would be a breach of a condition to its proposal to acquire the company for $0.06 a share, as announced on Friday.
Black Mountain also said that it had offered a $2-million loan to Poseidon, which should allow the nickel company to meet its short-term needs.
“As a result of this morning’s trading halt announcement by Poseidon Nickel, we intend to terminate our proposal regarding the acquisition of 100% of Poseidon Nickel’s shares at an attractive premium,” said Black Mountain CEO Rhett Bennett.
Black Mountain is the beneficial owner of the second largest shareholding in Poseidon and stated that it did not support a dilutive placement.
Poseidon on Friday described the Black Mountain proposal as informal and conditional, urging shareholders to take no action.
The Australian company has three near operational projects in Western Australia, and is currently drilling for lithium resources.