Diversified mining and exploration company Bauba and JSE-listed Raubex have resolved to propose a transaction in terms of which Raubex will make a general offer to acquire all of the ordinary shares in the issued share capital of Bauba it does not already own for a cash consideration of 42c apiece.
Raubex beneficially owns or controls 61.68% of Bauba's issued share capital.
Raubex will offer to acquire all of the shares held by eligible Bauba shareholders.
The offer is expected to open for acceptances from 09:00 on or about June 28 and remain open for acceptances for at least 30 business days.
As a result of the ongoing volatility in the mining sector, including weak chrome ore pricing and increased production costs; significant increases in local and international freight costs; and other continuing effects of the Covid-19 pandemic, Bauba and its subsidiaries recorded a total comprehensive loss of R52.3-million for the eight-month period ended February 28.
Bauba states that further risks remain of potential reduced global demand for chrome ore and concentrates owing to production capacity constraints in China; the uncertainty posed by potential additional Covid-19 waves, despite the availability of vaccines; and record freight costs.
If the chrome ore prices drop below June 2021 levels for an extended period, or if the rand:dollar exchange rate strengthens significantly, it could cause material uncertainty for the group to meet its obligations as they fall due and may require further external funding support, it warns.
In this context, the Bauba board of directors has resolved that the group can no longer justify the costs and associated administrative burden of a JSE listing relative to the benefit of an ongoing listing, including the doubtful prospects of a junior counter raising public capital in the sector in which Bauba operates.
Without the assistance of a major investor such as Raubex to support ongoing funding requirements, no finance is currently available to the group in the public market and the group says it will be better placed to secure funding support for its operations in an unlisted environment.
Moreover, following the conclusion of the mandatory offer, the shares have become highly illiquid on the JSE, with about 96.59% of the shares being held by three shareholders, and the offer is, therefore, intended to provide eligible shareholders with an exit opportunity at a fair price, which may otherwise not be forthcoming in the current economic climate and in particular as it relates to the sector in which Bauba operates.
All of Bauba’s shares will be delisted from the JSE if the requisite ordinary resolution approving the delisting is approved by eligible shareholders in a general meeting.
In accordance with the takeover regulations and listings requirements, the Bauba board and the independent board established by Bauba for the purposes of the Raubex offer have appointed Tamela Holdings as the independent expert.