PERTH (miningweekly.com) – Suitor TerraCom on Monday said that it would defend itself against any proceedings brought on by coal miner Universal Coal, after the takeover target warned that it would start litigation to impose a sanction on TerraCom to limit its ultimate stake in Universal.
TerraCom last week officially launched its 33.5c-a-share offer for each of Universal share held, consisting of 10c in cash and 0.6026 new TerraCom shares.
However, in an initial assessment of the takeover offer, Universal warned that the company had identified significant issues which would offend certain principles of the UK City Code on Takeovers and Mergers, which would be relevant to the company.
Universal on Monday said that the company’s Bid Committee had carefully considered the application of the UK City Code and had formed the view that the takeover protections contained within certain provisions of the articles of association could, and should be enforced.
As such, Universal has taken the decision to start litigation with the view to impose sanctions on TerraCom to prevent the suitor from gaining no more than a 20% interest in Universal as a result of the unsolicited takeover offer.
To apply the necessary sanctions, Universal will be required to obtain a court ruling.
TerraCom for its part has said that it would not hesitate to defend itself against the proposed proceedings, reserving the right to bring a legal claim against Universal and its directors if the company is found to be in breach of its fiduciary duties.
Furthermore, TerraCom claims that the proceedings being brought by Universal were as a result of Terracom urging the removal of Mark Eames, Tony Weber and Henri Bonsma as directors of Universal, with TerraCom claiming that the company had lost its confidence in the directors.