Athena Resources receives off-market offer from Entertainment Holdings

Athena Resources (ASX:AHN) has received a letter from Entertainment Holdings (OTC:XRXH) advising of its intention to make a conditional, proportional off-market offer to acquire 20% of the iron ore explorer.  

Athena, which has a $3.21 million market capitalisation, says the potential suitor seeks to acquire 2 out of every 10 shares held by shareholders for $0.003 each, from which Entertainment Holdings will deduct any dividends or distributions declared or paid after 26 March 2024. 

In response, Athena has advised its shareholders to take no action for the time being.

In the meantime, Athena will continue to operate and execute its business strategy in the ordinary course while it evaluates and assesses the terms of the offer. 

Key conditions of the offer include the appointment of 2 directors to Athena’s board, nominated by the suitor, within 2 months of the announcement (25 March 2024), as well as the resignation of Athena Managing Director Ed Edwards and Non-Executive Director Hau Wan Wai, who Entertainment Holdings says “have not appropriately managed the affairs of Athena in a manner required to fully exploit the potential of the Byro Base Metals Project.”

Entertainment Holdings noted that the company has undertaken 3 capital raises in 18 months, bringing in roughly $5 million in capital, but has not yet completed its long-awaited feasibility study. 

According to Entertainment Holdings, from financial years 2010 to 2023, Athena paid Edwards and Wai $3.19 million in fees, with Edwards receiving $2.16 million of that amount. During this period the company reported losses amounting to about $4.7 million. 

Based on these figures, the suitor states the directors’ fees made up almost 70% of those losses.   

Entertainment Holdings will also seek to immediately suspend all board fees and work to develop and clearly articulate a plan and timetable to commercialise the Byro Project as soon as possible.   

The company says this is an opportunity for Athena’s shareholders to realise cash for a portion of their illiquid shareholding while maintaining a shareholding to participate in the potential future improvement in Athena’s performance. 

Should the conditions be satisfied, Entertainment Holdings will increase the bid price to $0.006 per share, representing a 100% premium to Athena’s 3-month volume-weighted average price (VWAP) of $0.003 per share. 

As of 11am AEDT on Tuesday, 26 March, Athena’s share price had seen a 33.33% increase to $0.004 per share. 

To fund the takeover bid, Entertainment Holdings has entered into a term sheet with Komodo Capital to secure the necessary funds to meet the maximum cash consideration required, along with all transaction costs.   

Entertainment Holdings is expected to make its offer within the next 2 months and, assuming full acceptance of all offers, the company and its associates will hold less than 20% of all Athena shares on issue. 

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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.