Embattled gold producer St Barbara has again knocked back the advances of potential suitor Silver Lake Resources, saying a revised offer from frontrunner Genesis Minerals will fast-track benefits for long-suffering shareholders.
Raleigh Finlayson’s Genesis had last month sealed a deal with St Barbara to acquire its Leonora assets in exchange for $370 million in cash, 147.8 million shares and up to a further $60m of contingent scrip consideration before Silver Lake stepped in this month with an 11th-hour bid.
St Barbara revealed on Monday that Genesis had now offered to issue an extra five million shares upfront to St Barbara on completion of the deal and waive restrictions on the issue of 52.2 million performance rights shares. Those shares would be converted into Genesis scrip once the deal is done, rather than being tied to the start of production at St Barbara’s Tower Hill project under the original terms of the agreement.
The amended deal gives St Barbara an implied value of $631m, up from $625m based on Genesis’ closing price on Friday.
Genesis also sweetened the deal with an agreement to pay a cash deposit of $25m that will not be refunded if Genesis shareholders reject the buy-out.
Silver Lake last week attempted to allay St Barbara’s concerns about the timing of a possible transaction — which included $326m cash and 327.1 million Silver Lake shares — and liquidity issues. Revised terms restructured the scrip component of the deal so that an independent expert’s report would no longer be required.
It also provided for St Barbara to retain about 7.5 per cent, or 94.8 million Silver Lake shares, on completion of the deal, giving St Barbara about $111m in additional liquid assets to fund working capital requirements.
But St Barbara in Monday said it was standing by its deal with Genesis, arguing Silver Lake’s proposal remained “subject to significant uncertainty given it is not fully funded, is conditional on completion of detailed due diligence and does not provide any up-front financial commitment by Silver Lake that it will be able to complete the transaction”.
While acknowledging the total consideration of Silver Lake’s $658m offer remained higher than Genesis’ $631m, St Barbara said risks to a Silver Lake deal remained, including a possible trigger for Genesis to pull its proposal.
”In St Barbara’s view, Silver Lake has not provided any reasonable or quantitative assumptions to support its proposed consideration which could otherwise be confirmed via due diligence,” it said.
“(The) proposal is subject to significant timetable risk given the unrealistic requirement to complete mutual due diligence in a two-week timeframe in order to complete by Silver Lake’s suggestion of late July.
“St Barbara considers this timeframe is unrealistic in light of the due diligence requests made by Silver Lake and what will be required for St Barbara to gain confidence in the outlook for the Silver Lake portfolio (including a newly acquired asset in North America).”
St Barbara is being advised by Macquarie as financial adviser and King & Wood Mallesons as legal adviser.
