Atlas Iron bid for FerrAus is value diluting - Wah Nam
2011-07-20 09:27:53 [Print]
Hong Kong's Wah Nam said that Atlas Iron's AUD 300 million plus bid for West Australian iron ore junior FerrAus is value diluting and has called on the target's board to give better reasons for shareholders to support it.
Wah Nam secured control recently of FerrAus's neighbor Brockman Resources but dropped a bid for FerrAus late last month after it was trumped by Atlas. The bid left Wah Nam, FerrAus's largest shareholder, with a 16.4% stake.
Mr Peter Luk chairman of Wah Nam said in a letter to the FerrAus board said that "Wah Nam asks the FerrAus board to explain why FerrAus shareholders should support what appears to be a complex, value diluting series of transactions that will see FerrAus essentially trade its Pilbara Project and Port Hedland port allocation in return for a portion of under explored, stranded tenements of little economic value to Atlas."
Under the Atlas deal, which the FerrAus board has recommended shareholders approve, Atlas will first take a 38% stake in FerrAus through a AUD 24.3 million share placement at 65 cents a share and the sale to FerrAus, for scrip, of some Pilbara iron ore assets.
Atlas would then offer one of its shares for every four of FerrAus's in a full scrip takeover.
Mr Luk said that "The transactions will deliver to Atlas effective control of FerrAus at a price that is unconscionably low, let alone any premium for control."
Mr Luk called on the FerrAus board to make the independent expert valuing the target ahead of a shareholder vote on the deal aware of Wah Nam's concerns.
Wah Nam secured control recently of FerrAus's neighbor Brockman Resources but dropped a bid for FerrAus late last month after it was trumped by Atlas. The bid left Wah Nam, FerrAus's largest shareholder, with a 16.4% stake.
Mr Peter Luk chairman of Wah Nam said in a letter to the FerrAus board said that "Wah Nam asks the FerrAus board to explain why FerrAus shareholders should support what appears to be a complex, value diluting series of transactions that will see FerrAus essentially trade its Pilbara Project and Port Hedland port allocation in return for a portion of under explored, stranded tenements of little economic value to Atlas."
Under the Atlas deal, which the FerrAus board has recommended shareholders approve, Atlas will first take a 38% stake in FerrAus through a AUD 24.3 million share placement at 65 cents a share and the sale to FerrAus, for scrip, of some Pilbara iron ore assets.
Atlas would then offer one of its shares for every four of FerrAus's in a full scrip takeover.
Mr Luk said that "The transactions will deliver to Atlas effective control of FerrAus at a price that is unconscionably low, let alone any premium for control."
Mr Luk called on the FerrAus board to make the independent expert valuing the target ahead of a shareholder vote on the deal aware of Wah Nam's concerns.
