FeOre shareholders smile on Chinese deal
PERTH (miningweekly.com) – The share price of ASX-listed junior FeOre spiked nearly 42% on Wednesday, after the company revealed that it had divested its interest in Topone Star Investments.
The transaction with China Energy would see FeOre receive a cash consideration of $51.03-million and a conditional deferred payment equalling $56.7-million, payable in three tranches.
The first $5.67-million would be payable on the satisfaction of the conditions precedent, with the second tranche of $45.36-million payable within five business days thereafter.
A final $5.67-million would be paid in the escrow account and would be released once a subsidiary of China Energy listed on the Hong Kong stock exchange.
FeOre chairperson Tim Sun said on Wednesday that the transaction resulted from the company’s board actively identifying financing solutions to fund the development of its major iron-ore projects.
“The transaction was the only proposal capable of being put to shareholders. While the board thinks that the transaction undervalues the company, the board presents the shareholders an option to consider,” he said.
Sun added that should shareholders decide not to proceed with the transaction, the company would continue in its efforts to source alternative solutions.
Besides shareholder approval, the transaction was also subject to a complete due diligence process and FeOre obtaining written consent for waivers from the holders of about $25-million in convertible bonds, which would mature in December.
Proceeds from the first payment of the transaction would be used to redeem the convertible bonds, while the second tranche payment would be used to undertake a share buy-back programme.
The junior company’s shares were trading at a high of A$0.058 on Wednesday, up from a low of A$0.048 a share.
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