Level 2

Baobab Resources (BAO)

Sector:

Mining

Index:

FTSE AIM All-Share

   Trade now with Barclays Stockbrokers   Trade now with Barclays   Sponsored by Barclays Stockbrokers

 5.38p
   
  • Change Today:
      0.000p
  • 52 Week High: 14.25
  • 52 Week Low: 4.63
  • Currency: UK Pounds
  • Shares Issued: 342.34m
  • Volume: 9,238
  • Market Cap: £18.40m
  • RiskGrade: 339
  • Beta: 1.19

Proposed Placing, Code Waiver and General Meeting

RNS Number : 1049V
Baobab Resources PLC
10 December 2013
 



10 December 2013

 

BAOBAB RESOURCES PLC

 

Proposed Placing, Code Waiver and Notice of General Meeting

 

 

Baobab Resources Plc ("Baobab" or the "Company") is wholly focused in Mozambique where it is developing a pig iron and ferro-vanadium project in the Tete province (the 'Tete Pig Iron Project'), one of Africa's fastest growing mining centres.  

As announced on 11 October 2013, the Company has entered into the Placing Agreement with Redbird which can potentially fund the Company's full requirement to completion of the Definitive Feasibility Study work programme. Redbird is a wholly owned subsidiary of African Minerals Exploration & Development Fund SICAR SA. 

 

A circular, containing information about the background to and the reasons for this fundraising, will be posted to shareholders today (the "Circular"). The Circular contains a Notice of General Meeting and sets out why the Board recommends that Shareholders vote in favour of the Conditional Placing Resolution which is to be proposed at the General Meeting. The General Meeting will be held at the offices of Watson, Farley & Williams LLP, 15 Appold Street, London, EC2A 2HB on 30 December 2013 at 10 a.m.

 

 

Overview:

 

Pursuant to the Placing Agreement:

 

·   Redbird subscribed immediately for 5,000,000 Ordinary Shares at a price of 15 pence per Ordinary Share, raising £750,000 before expenses, thereby increasing its relevant interest in the Company from 26.73 per cent. to 27.93 per cent. of the Company's total voting rights.  The Placing Shares were admitted to trading on AIM on 16 October 2013.

·   Redbird was granted options to subscribe for 5,000,000 Ordinary Shares at an exercise price of 20 pence per Ordinary Share, expiring at 5.00 p.m. on 30 June 2016.  On the discretionary exercising of the Placing Options by Redbird, a further £1,000,000 could be raised.

·   The Company has agreed conditionally to place with Redbird, subject to passing of the Conditional Placing Resolution and the Waiver, a further 8,500,000 Ordinary Shares at a price of 15 pence per Ordinary Share to raise a further £1,275,000 before expenses.

·   Redbird will, subject to passing of the Conditional Placing Resolution and the Waiver, also be granted options to subscribe for 8,500,000 Ordinary Shares at an exercise price of 20 pence per Ordinary Share, expiring at 5.00 p.m. on 30 June 2016. On the discretionary exercising of the Conditional Placing Options by Redbird, a further £1,700,000 could be raised.

·   Redbird will, subject to passing of the Conditional Placing Resolution and the Waiver, also be granted options to subscribe for up to 27,000,000 Ordinary Shares at an exercise price per Ordinary Share equal to 105 per cent. of the volume-weighted average price for the five consecutive trading days immediately prior to the date of exercise. The Third Tranche Options are discretionarily exercisable by Redbird from the date of issue until 5.00 p.m. on the first anniversary of the issue of the Third Tranche Options.

·   Through the Placing Agreement, Redbird has the potential, subject to passing of the Conditional Placing Resolution and the Waiver, to increase its total holding in the voting rights of the Company to 37.85 per cent. of the Enlarged Redbird Diluted Share Capital or 34.89 per cent. of the Enlarged Fully Diluted Share Capital.

·   The Takeover Panel has agreed, subject to the Conditional Placing Resolution being passed on a poll by the Independent Shareholders at the General Meeting, to waive the obligation on the Redbird Concert Parties to make a general offer to Shareholders under Rule 9 of the Takeover Code.

·   The Directors (excluding David Twist and Carlo Baravalle who are nominees of Redbird), who have been so advised by Grant Thornton, consider the terms of the Conditional Placing and the passing of the Conditional Placing Resolution to be fair and reasonable and in the best interests of Independent Shareholders and the Company as a whole.

Admission to trading on AIM of the Placing Shares became effective and trading commenced on 16 October 2013. The Placing Shares rank pari passu in all respects with the existing issued Ordinary Shares in the Company. The total issued share capital of Baobab following the allotment of the Placing Shares is 306,838,426 Ordinary Shares and Redbird has a relevant interest representing 27.93 per cent. of the Company's total voting rights.

Under Rule 9 of the UK Takeover Code (Rule 9), where any person acquires, whether by a series of transactions over a period of time or not, an interest (as defined in the Takeover Code) in shares which (taken together with shares in which he is already interested and in which persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company that is subject to the Takeover Code, that person is normally required by the Panel to make a general offer to all the remaining shareholders to acquire their shares. The issue of the Conditional Placing Shares along with the subsequent exercise of the Conditional Placing Options and Third Tranche Options is expected to result in Redbird being interested in more than 30 per cent. of the voting rights of the Company and is therefore subject to the Takeover Panel agreeing to waive the obligation of Redbird to make a general offer that would otherwise arise as a result of the issue of the Conditional Placing Shares along with the subsequent exercise of the Conditional Placing Options and Third Tranche Options, subject to the approval of Independent Shareholders on a poll.

 

For Further Information please contact:

 

Baobab Resources PLC


Ben James: Managing Director

Tel: +258 21 415 200

Jeremy Dowler: Chairman

Tel: +44 1372 450529

Frank Eagar: CFO

Tel: +258 21 415 200



Grant Thornton UK LLP


Philip Secrett | David Hignell | Jamie Barklem

Tel: +44 20 7383 5100



Shore Capital Stockbrokers


Jerry Keen | Toby Gibbs

Tel: +44 20 7468 7964



Fortbridge Consulting


Matt Beale

Tel: +44 7966 389 196

 

Background to and reason for the Placing and the Waiver

With the Pre-Feasibility Study successfully concluded, Baobab has embarked on a Definitive Feasibility Study. The Company has selected an internationally accredited engineering group as the lead project consultants, with specialist consultants covering mining and resources, reduction technology, power infrastructure and environmental/social studies respectively, and is currently in the process of negotiating contracts with all such consultants for their respective studies.

Work programmes have been prioritized to address key areas of perceived risk with measured resource drilling and bench-scale metallurgical test work well underway. A bulk sample has been collected and despatched to South Africa for pilot-scale comminution and beneficiation tests prior to reduction test work in the USA and finally smelting studies.

Following on from the environmental impact scoping study completed during the Pre-Feasibility Study and successfully lodged with the relevant government authorities, wet and dry season environmental baseline studies have been completed. These studies, complemented by a demographic survey currently underway, will form the basis of the Environmental, Social and Health Impact Assessment.

In parallel with the technical and environmental/social programmes, Baobab is making significant advances in formalizing port, rail and power allocations on the existing and expanding infrastructure facilities. The Company has signed a memorandum of understanding with the Mozambique power utility company Electricidade de Moçambique, E.P and, in conjunction with EDM, has engaged Parsons Brinckerhoff to complete a study to identify and prioritise potential power sources and accurately estimate tariff rates. The study will also assess the cost benefits of power co-generation through the capture and treatment of off-gasses from the iron making facility.

Additionally, agreements are in advanced draft form with both private and public sector groups to secure access to port and rail facilities, with a focus on the Sena line/Beira port corridor, where capacity is currently being expanded to c.18Mtpa, and the c.22Mtpa Nacala corridor, which is on schedule for commissioning by the first quarter of 2015.

Baobab has entered into the Placing Agreement with Redbird in order to provide the Company with the necessary funds that could potentially fund the Company's full requirement to completion of the Definitive Feasibility Study work programme which includes:

·     pilot plant metallurgical test work on a 15 tonne bulk sample;

·     a limited 3,000 metre drilling program with the objective to bring resources to measured status which will support the first 25 years mine life of the project;

·     continuing of environmental studies and moving to signature of memorandum of understanding for power, rail and port allocation; and

·     performing a detailed study on the power generation options available to the Tete Pig Iron Project and the long term supply solutions.

Redbird has been a significant and supportive shareholder of Baobab since acquiring a significant interest in the Company in July 2012. Redbird currently holds 85,693,158 Ordinary Shares and the Company has entered into the Placement Agreement in the context of the following factors:

(i)         it secures the Company's planned financing requirements at a time of challenging global economic and market conditions, especially in the junior mining sector, and in particular, will provide financing for the Definitive Feasibility Study of its Tete Pig Iron Project;

(ii)        it would be very difficult to raise funds similar to the amount of the Placing through the equity market on better terms or at all;

(iii)       it emphasises the support of the Company's cornerstone investor and Redbird's willingness to participate in the Company's transition from explorer to project developer; and

(iv)       it provides the required funding to de-risk the Tete Pig Iron Project, continue with the Definitive Feasibility Study and to create a credible platform from which to approach the providers of funding for the ultimate development of the Tete Pig Iron Project.

Information relating to the Redbird Concert Party

For the purposes of the Takeover Code, Redbird is acting in concert with the Fund and the General Partner.

Redbird is a special purpose vehicle incorporated, and with its registered office, in Cyprus. It was established on 17 May 2012 for the purposes of investing in the Company pursuant to a Placing Letter dated 5 July 2012. The sole shareholder of Redbird is the Fund and the Fund is managed solely by the General Partner.  

The General Partner makes investment decisions on behalf of the Fund in-line with the Fund's investment strategy.

Detailed information about Redbird, The Fund, The Fund's investment strategy and the General Partner is presented in the Circular.

Intentions of the Redbird Concert Party

The members of the Redbird Concert Party have confirmed that, for a period of twelve months from the date of Admission, they have no intention to make any changes regarding the future of the Company's business, its admission to AIM, the locations of the Company's places of business and  the continued employment of its employees and management (and those of its subsidiaries) (without any material changes in the conditions or location of employment) as a result of the Conditional Placing nor will there be any redeployment of the fixed assets of the Company as a result of the Conditional Placing. The Company currently has no pension scheme.

 

Takeover Code

The Conditional Placing gives rise to certain considerations under the Takeover Code.  Brief details of the Takeover Panel, the City Code and the protections they afford are described below.

The Takeover Code is issued and administered by the Panel.  The Takeover Code applies to all takeover and merger transactions, however effected, where the offeree company has its registered office in the United Kingdom, the Channel Islands or the Isle of Man and, inter alia, whose securities are admitted to trading on a multilateral trading facility in the United Kingdom (such as AIM).

The Company has been subject to the Takeover Code since 30 January 2013 when Carlo Baravalle, who is a resident of the UK, was appointed to the Board. At this point a majority of the Company's directors were resident in the UK and the Panel confirmed that the Company should be subject to the Code as a result of Carlo Baravalle's appointment. As a result of changes to the Code which came into effect on 30 September 2013 the residency test no longer applies and the Company is now subject to the Code by virtue of being a UK registered public company whose shares were admitted to trading on AIM.

Under Rule 9 of the Takeover Code where: (i) any person acquires an interest in shares (as defined in the Takeover Code) which, when taken together with shares in which he or persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company subject to the Takeover Code; or (ii) any person who, together with persons acting in concert with him, is interested in not less than 30 per cent. but does not hold shares carrying more than 50 per cent. of the voting rights of a company subject to the Takeover Code and such person, or persons acting in concert with him, acquires further interests in shares which increase his percentage of the voting rights, such persons are normally obliged to make a general offer to all the remaining shareholders to purchase, in cash, their shares at the highest price paid by him, or any person acting in concert with him, within the preceding 12 months.

Rule 9 of the Takeover Code further provides, among other things, that where any person who, together with persons acting in concert with him holds over 50 per cent. of the voting rights of a company, acquires an interest in shares which carry additional voting rights, then they will not generally be required to make a general offer to the other shareholders to acquire the balance of their shares.

For the purposes of the Takeover Code, persons acting in concert comprise persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition by them of shares in a company, to obtain or consolidate control of that company.  The Redbird Concert Parties are acting in concert for the purposes of the Takeover Code.

In the event that the Conditional Placing proceeds, following the Conditional Placing, Redbird has the potential to increase its shareholding in the Company to 37.85 per cent. of the Enlarged Redbird Diluted Share Capital and 34.89 per cent. of the Enlarged Fully Diluted Share Capital which, without a waiver of the obligations under Rule 9, would oblige the Redbird Concert Parties to make a general offer under Rule 9 in certain circumstances

Under Note 1 on the Notes on the Dispensations from Rule 9 of the Takeover Code, the Takeover Panel will normally waive the requirement for a general offer to be made in accordance with Rule 9 of the Code if, inter alia, the shareholders of the company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with him pass an ordinary resolution on a poll at a general meeting approving such a waiver.

The Takeover Panel has agreed, subject to the Conditional Placing Resolution being passed on a poll by the Independent Shareholders at the General Meeting, to waive the obligation on the Redbird Concert Parties to make a general offer to Shareholders under Rule 9 of the Takeover Code, which would otherwise potentially arise as a result of the issue of the Conditional Placing Shares along with the subsequent exercise of the Conditional Placing Options and Third Tranche Options.

The Redbird Concert Party has not purchased any Ordinary Shares (other than the Redbird Shares) preceding the date of this announcement.  The Waiver, which the Takeover Panel has agreed to provide subject to the passing of the Conditional Placing Resolution, will be invalidated if any purchases of Ordinary Shares are made by Redbird or any Redbird Concert Party between the date of this announcement and the General Meeting.  Redbird and the other Redbird Concert Parties have undertaken to the Company that they will not make any such purchases of Ordinary Shares.  

Any increase in Redbird's aggregate shareholding up to 50 per cent. of the voting rights arising other than from the issue of the Conditional Placing Shares or the exercise of the Conditional Placing Options or Third Tranche Options will be subject to the provisions of Rule 9 of the Takeover Code.

General Meeting

At the General Meeting, to be held at 10 a.m. at the offices of Watson, Farley & Williams LLP, 15 Appold Street, London, EC2A 2HB on 30 December 2013, Independent Shareholders will be asked to consider the Conditional Placing Resolution, which must be passed in order to effect the Conditional Placing. The Conditional Placing Resolution being proposed is as follows:

1.       "ORDINARY RESOLUTION

 

THAT the issue by the Company of 8,500,000 Conditional Placing Shares, 8,500,000 Conditional Placing Options and 27,000,000 Third Tranche Options, and the grant by the Takeover Panel (as defined in the Circular of which this notice forms part) of the waiver on the terms described in Part II of the Circular of any requirement of any Redbird Concert Party (as defined in the Circular) to make a general offer to Shareholders of the Company under Rule 9 of the Takeover Code (as defined in the Circular) as a result thereof, be and is hereby approved and authorised."

 

The Company has sufficient authority to issue the Conditional Placing Shares, Conditional Placing Options and Third Tranche Options assuming the Conditional Placing Resolution is passed.

Action to be taken

A Form of Proxy is enclosed for Shareholders at the General Meeting. If you are a Shareholder, you are requested to complete, sign and return the Form of Proxy, whether or not you intend to be present at the meeting, and return it to Share Registrars Limited at Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey, GU9 7LL, United Kingdom by no later than 10.00 a.m. (London time) on 24 December 2013. The completion and return of a Form of Proxy will not prevent you from attending the meeting and voting in person should you subsequently wish to do so.

Recommendation

The Directors (excluding David Twist and Carlo Baravalle who are nominees of Redbird), who have been so advised by Grant Thornton, consider the terms of the Conditional Placing and the passing of the Conditional Placing Resolution to be fair and reasonable and in the best interests of Independent Shareholders and the Company as a whole.  In providing advice to the Directors, Grant Thornton has taken into account the Directors' commercial assessments (excluding those of David Twist and Carlo Baravalle who are nominees of Redbird).

Accordingly, the Directors (excluding David Twist and Carlo Baravalle who are nominees of Redbird) unanimously recommend that the Shareholders vote in favour of the Conditional Placing Resolution. 

In accordance with the provisions of the Takeover Code, each member of the Redbird Concert Party is considered to be interested in the outcome of the resolution to approve the Waiver (the Conditional Placing Resolution) and, accordingly, will not vote on the Conditional Placing Resolution, and each of them has confirmed this to the Company.

The Directors (excluding David Twist and Carlo Baravalle who are nominees of Redbird) have also given irrevocable undertakings to vote in favour of the Conditional Placing Resolution at the General Meeting in respect of 11,654,669 Ordinary Shares representing 3.8 per cent. of the Ordinary Shares in issue of the date of this announcement.

Expected Timetable of Principal Events

Event

Time and/or date

Record date for the General Meeting

10 a.m. on 24 December 2013

Latest time and date for receipt of Forms of Proxy 

10 a.m. on 24 December 2013

General Meeting

10 a.m. on 30 December 2013

Announcement of the results of the General Meeting

30 December 2013

Expected date of issue of the Conditional Placing Shares

30 December 2013

Expected date of Admission of the Conditional Placing Shares

31 December 2013

 

Definitions

The following definitions apply throughout this announcement:

"Admission"

means the admission of the Conditional Placing Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules;

 "AIM"

the market known as AIM operated by the London Stock Exchange;

"AIM Rules"

the rules applicable to companies whose securities are traded on AIM and their advisers, together with the guidance note for mining and oil and gas companies, as published by the London Stock Exchange from time to time;

"Board"

the board of directors of the Company from time to time;

"Company" or "Baobab"

Baobab Resources Plc;

"Conditional Placing"

the conditional placing of the Conditional Placing Shares, the Conditional Placing Options and the Third Tranche Options pursuant to the Placing Agreement;

"Conditional Placing Options"

the options to subscribe for 8,500,000 Ordinary Shares to be issued to Redbird pursuant to the Placing Agreement if the Conditional Placing Resolution is approved and the Waiver is granted;

"Conditional Placing


Resolution"

the ordinary resolution to be tabled at the General Meeting which is to be voted on by way of a poll of Independent Shareholders;

"Conditional Placing Shares"

the 8,500,000 Ordinary Shares to be issued to Redbird pursuant to the Placing Agreement if the Conditional Placing Resolution is approved and the Waiver is granted;

 "Definitive Feasibility Study"

a detailed study to form the basis for the economic viability and capital appropriation of the Tete Pig Iron Project, which will provide the budget figures for the development of the Tete Pig Iron Project to an accuracy within 10-15 per cent.;

"Directors"

the current directors of the Company;

"EDM"

Electricidade de Moçambique, E.P;

"Enlarged Fully Diluted

the Ordinary Shares in issue on completion of the Placing

Share Capital"

and arising on exercise in full of all existing options and all Redbird Options;



"Enlarged Redbird Diluted

the Ordinary Shares in issue on completion of the Placing

Share Capital"

and arising on exercise in full of all Redbird Options (but no other existing options);



 "Form of Proxy"

as included in the notice of General Meeting;

"Fund"

African Minerals Exploration & Development Fund SICAR SCA, a Luxembourg regulated private equity fund with registration number (RCS Luxembourg) B 164730 and registered address at 412 F, route d'Esch, L-2086 Luxembourg, Grand-Duchy of Luxembourg, which is the holding company of Redbird;

"General Meeting"

the meeting of the Shareholders of the Company to be held on 30 December 2013 at the offices of Watson, Farley & Williams LLP, 15 Appold Street, London, EC2A 2HB at 10 a.m.;

"General Partner "

African Minerals Exploration & Development GP, S.à.r.l., a Luxembourg société à responsabilité limitée with offices at 412 F, route d'Esch, L-2086 Luxembourg, Grand-Duchy of Luxembourg, which is the general partner of the Fund;

"Group"

the Company and its subsidiaries;

"Independent Shareholders"

the Shareholders other than Redbird and any Redbird Concert Party;

"London Stock Exchange"

London Stock Exchange plc;

 "New Redbird Options"

the Conditional Placing Options and the Third Tranche Options;

"Nominated Adviser" or


"Grant Thornton"

Grant Thornton UK LLP, the Company's nominated adviser;



 "Ordinary Shares"

the ordinary shares of £0.01 in the capital of the Company in issue from time to time;

"Placing"

(i) the issue of the Placing Shares and the Placing Options; and (ii) the proposed issue, conditional on approval of the Conditional Placing Resolution and on the Waiver, of the Conditional Placing Shares, the Conditional Placing Options and the Third Tranche Options, details of which are set out in the Circular;

"Placing Agreement"

the placing agreement dated 10 October 2013 between the Company and Redbird relating to the Placing;

"Placing Fee"

a fee equal to 5 per cent. of the funds raised from the issue of the Placing Shares and, when issued, the Conditional Placing Shares;

"Placing Options"

the options to subscribe for 5,000,000 Ordinary Shares issued to Redbird pursuant to the Placing Agreement;

"Placing Shares"

the 5,000,000 Ordinary Shares issued to Redbird pursuant to the Placing Agreement;

"Pre-Feasibility Study"

a preliminary feasibility study to form the basis for the economic viability and capital appropriation of the Tete Pig Iron Project, which will provide the budget figures for the development of the Tete Pig Iron Project to an accuracy within 20-30 per cent;

"Redbird"

Redbird Investments Ltd, a limited liability company incorporated under the laws of Cyprus with registered office 2 Apostolos Varnavas, Centaur House, 2571 Nisou, Nicosia, Cyprus and registration number HE306489, which is the wholly owned subsidiary of the Fund;

"Redbird Concert Party" or


"Redbird Concert Parties"

Redbird, the Fund and the General Partner;

"Redbird Options"

the Placing Options and the New Redbird Options;

"Redbird Shares"

the 85,693,158 Ordinary Shares (including the Placing Shares) held by Redbird of which 80,000,000 Ordinary Shares are held directly by Redbird and 5,693,158 Ordinary Shares are indirectly held by Redbird through Redbird's custodian bank as at the date of this announcement;

"Registrar"

Share Registrars Limited acting in its capacity as registrar pursuant to the terms of the agreement for the provision of registry services entered into between the Company and Share Registrars Limited;

"Rule 9"

Rule 9 of the Takeover Code;

 "Shareholders"

holders of Ordinary Shares;

 "Takeover Code"

the UK Takeover Code on Takeovers and Mergers;

"Takeover Panel"

the Panel on Takeovers and Mergers;

"Tete Pig Iron Project"

the Company's pig iron and ferro-vanadium project in the Tete province of Mozambique;

"Third Tranche Options"

the option to subscribe for 27,000,000 Ordinary Shares to be issued to Redbird if the Conditional Placing Resolution is approved and the Waiver is granted;

"UK" or "United Kingdom"

the United Kingdom of Great Britain and Northern Ireland;

"Waiver"

the waiver by the Takeover Panel of Rule 9 of the Takeover Code as described in this announcement; and

"£"

pounds sterling, the lawful currency of the UK from time to time.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCEAAANEDLDFAF

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

Note 2: RiskGrade figures are provided by RiskMetrics.

 

Top of Page