PERTH (miningweekly.com) – Takeover target Universal Coal has reiterated its ‘take no action’ advisory to shareholders, after receiving an official takeover offer from South Africa-based IchorCoal.
IchorCoal, which holds a 29.99% stake in Universal, on Wednesday officially launched its takeover bid, offering Universal shareholders 16c a share in cash.
Universal again advised shareholders on Thursday not to take any action on the offer, while a subcommittee of directors undertook a detailed review of the proposal.
The previously formed subcommittee had assessed the offer when it was initially raised in August and came to the conclusion that the offer was highly conditional, inadequate and opportunistic.
The subcommittee also felt that the offer price represented a low valuation multiple, based on Universal’s existing production and ignored the value of its near-term production and longer-term development pipeline.
Universal pointed out that, since the offer was initially flagged, the company has been approached by other parties that had expressed an interest in making alternative offers.
As a result, Universal had opened a data room to credible and interested alternative bidders, who had all signed nondisclosure agreements.
Among these interested parties was an as-yet-unnamed party which had provided Universal with a written, nonbinding indicative proposal for 20c in cash for all shares held.
Universal said its independent directors and their advisers would continue to engage with this third party, as well as other interested parties, to determine whether a formal alternative offer could be made.
The IchorCoal offer would close on December 3.