Suitor Gemcorp Commodities Assets Holdings will not go ahead with its proposed takeover of Sierra Rutile (ASX:SRX).
Gemcorp and Sierra previously entered into a bid implementation agreement following Gemcorp’s off-market all-cash offer of $0.16 per share.
The offer was tabled at the start of July after Sierra successfully fought off a board spill attempt by PRM Services, which in March this year put forward an on-market all-cash takeover bid of $0.095 per share.
Subsequent to those offers, Sierra then received an off-market cash offer of $0.18 per share from Sierra Leone-based fuel station owner Leonoil Company, which supplies fuel to Sierra Rutile.
Gemcorp had three business days to either match or better the bid.
As a result of the termination of the agreement with Gemcorp, Sierra was required to pay a US$400,000 ($609,879) break fee.
Sierra, which has a market capitalisation of $75.3 million, continues to recommend shareholders reject the PRM offer, which closes on 31 July 2024, and now accept the Leonoil offer.
On 22 July, the rutile producer inked a binding implementation agreement with Leonoil.
The Leonoil offer is a 12.5% premium to Gemcorp’s offer, which was already a 28.3% premium to Sierra’s three-month volume weighted average price and a 68.4% premium to PRM’s offer.
Prior to tabling its offer, Leonoil already held a 19.85% stake in Sierra. There is no minimum acceptance condition under the bid implementation agreement.
Managing Director Theuns de Bruyn says Sierra had a challenging June quarter which includes a fatality and strike action at its Area 1 operations.
Sierra produced 11,000 tonnes of rutile during the quarter, which was reduced due to the suspension of operations. The company sold 3,000 tonnes at a realised average price of $1,838 per tonne free-on-board.
Sierra’s cash balance sat at $11.2 million unaudited at the end of the quarter.
Write to Angela East at Mining.com.au
Images: Sierra Rutile
