Polo boost from potential Caledon offer

AIM-quoted Polo Resources will be a winner from a bid for coal miner Caledon Resources. The intended offer for AIM-quoted and ASX-listed Caledon from Guangdong Rising Asset Management (GRAM), which is worth 112p cash per share and values the company overall at £252m, still has to get over a number of regulatory hurdles. The bid is much better than a 68p a share indicative offer earlier in the year. Polo has just over 62m shares, worth £69.5m at the bid price, and £5.12m worth of convertible loan notes. Caledon has also provided £18m, of which £14.9m is outstanding, and A$4m loan facilities for Caledon. At the end of October, the loans were extended until 28 February, or earlier if there is a change of control. An additional £550,000 facility fee for the extension will be payable when the loan facilities are paid back. That could be by the end of 2010. Polo, which tried to merge with Caledon in the summer, has declared its support for the bid. The value of the stake in, and loans to, Caledon is equivalent to around 80% of Polo's market value. The cash pile of £41.5m more than covers the rest of the valuation. That leaves the stake in AIM-quoted GCM Resources, which Westhouse values at £40m, in for nothing. GCM Resources