Thursday 27 October 2016

Kenmare targeted in €265m buyout bid

Published 01/05/2015 | 02:30

Michael Carvill, Managing Director of Kenmare Resources
Michael Carvill, Managing Director of Kenmare Resources

Mining firm Kenmare Resources could be acquired for A$371m (€265m) by Australian firm Iluka, marking an end to its 30 years of Irish ownership.

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Kenmare, whose managing director is Michael Carvill, said that the proposed terms of a possible takeover are subject to a significant number of pre-conditions, and that there's no certainty a formal offer will be made.

But the board of Kenmare Resources told investors that it would be in the interests of shareholders to work towards sealing a takeover deal.

"The board of Kenmare has reviewed the proposal carefully and has considered Kenmare's financial position, prevailing market conditions and the terms of the debt amendment announced today," the company said.

"Having taken independent advice and subject to its fiduciary duties, the board ... believes that it is in Kenmare's shareholders' and other stakeholders' interests for Kenmare to continue to work with Iluka towards satisfaction of the pre-conditions to Iluka's proposal."

Iluka has been chasing Kenmare for some time. Last year, Kenmare rejected an indicative offer that would have valued the Irish company at over €500m.

Shares in Kenmare opened up over 37pc yesterday morning before falling back. By mid-afternoon they were up 22pc. Under the terms of a proposed offer, Kenmare shareholders would receive 0.016 shares in Iluka for every Kenmare share they own. Iluka has a market capitalisation of A$3.5bn (€2.5bn).

Kenmare has been struggling financially and has been involved in marathon negotiations to restructure its debt. It has also been hit by falling resources prices.

The company said it that it has finally negotiated terms of a debt restructure. That will see it secure a facility of up to $50m (€45m), with $30m of that earmarked for working capital purposes and $20m available to fund certain disputed liabilities that are subject to arbitration.

Kenmare is in dispute with a contractor related to $19.5m in costs. During 2014, Kenmare paid $3.1m in costs related to arbitration of that dispute.

The arbitration process is expected to continue until 2016. Kenmare has also raised a counter-claim against the contractor.

Kenmare has one operational asset - the Moma ilmenite and zircon mine in Mozambique. It is one of the biggest ilmenite mines in the world. Ilmenite is used to make titanium.

Kenmare also released a first quarter update yesterday. Mr Carvill said Kenmare's operations had been "severely impacted" by power outages.

Irish Independent

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