Europe- and Latin America-focused Ascent Resources on Thursday revealed that it had approached the board of Amur Minerals, which is a cash shell following its disposal of its Russian nickel asset earlier this year, with a takeover proposal.
In a statement, Ascent says that its vision is for the two companies to combine to form a bigger, well-funded and more liquid entity. The Latin America-focused metals processing businesses emerging from the combination will be supported by Amur's remaining cash balance (post dividend) as well as Ascent’s funded €500-million monetary damages claim.
Ascent submitted a nonbinding proposal to the Amur board in November to acquire that company in a share-for-share exchange on the ratio of about one new Ascent share for every 21 Amur shares in issue.
On the assumption that Amur only has assets of $5-million in cash (post payment of dividend) and no further material liabilities, the indicative proposal is equivalent to a gross equity valuation of 6.1p per new Ascent share.
“Despite multiple conversations with the board of Amur and multiple follow-up correspondence, the company has as yet been unable to elicit a written response to their offer,” Ascent said in a statement.
The indicative proposal also included the intention to combine the skills of both executive teams, as well as other potential changes to the enlarged group's nonexecutive directors. It is intended that the enlarged group will have a majority of board directors from Ascent.
The exchange ratio, based on Ascent’s volume-weighted average share price of 3.6716p on Wednesday, being the last business day immediately prior to the date of this announcement, currently represents a value of about 0.175p per Amur share.
At the current value of about 0.175p per share implied by the exchange ratio, a potential offer, if made, when added to the 1.8p dividend to be paid by Amur would represent a premium of 7.3% to the Amur closing price on May 31 and 47.5% to the monthly average volume-weighted average price for Amur shares over the six-month period starting December 1.
Under the terms of the indicative proposal, it is expected that Amur shareholders will own 28.6% of the enlarged group, and Ascent shareholders will own 71.4% of the enlarged group.
Ascent is an Aim-listed oil and gas exploration and production company. It operates the Petisvoci tight gas project in Slovenia.