LONDON (Alliance News) - SolGold PLC on Thursday told shareholders it is no longer recommending the proposed investment in the company by Newcrest International after a better offer was received at twice the price.
The miner struck a deal at the end of last month for Newcrest to buy 135.7 million new shares in the business at a price of 8.0 cents each, which would have given it a 10% stake in return for a total investment of USD10.8 million.
The investment needed approval from SolGold shareholders and the board, alongside the largest shareholder DGR Global, recommended the deal but did state that could change if a superior offer was made.
That has now happened after Maxit Capital LP, the firm that assisted the company with a larger fundraising earlier this year, said it could arrange the same level of investment or an even greater investment at double the price being offered by Newcrest.
Maxit proposes arranging investment into SolGold priced at 16.0 cents per share to raise USD20.0 million, but said it has received commitments from interested buyers in excess of that.
Importantly, Maxit has said Newcrest could participate in the fundraising it has proposed and has offered it the chance to subscribe to slightly more shares than it intended to purchase, but still equal to a 10% stake and at the higher price of 16.0 cents, meaning Newcrest will have to pay double.
Newcrest has until Friday to make a decision whether it wants to pay USD22.9 million for 142.9 million new shares in SolGold.
If Newcrest decides to invest, Maxit and its clients would then only subscribe for shares worth USD10.1 million - meaning the total raised would be USD33.0 million.
"The board of SolGold considers the terms of the competing proposal received to be more favourable to the company than the Newcrest subscription, and has today in accordance with the requirements of the agreement, notified Newcrest that it has received a competing proposal which it has reasonably determined would be more favourable to the company's shareholders," said the miner.
"The board will advise the market of developments in respect of the final size of the raising and the nature and extent of any participation by Newcrest in that raising or otherwise, and recommends that shareholders wait for further advice ahead of lodging any proxy votes for the General Meeting to be convened on 13 October 2016," SolGold added.
SolGold shares were up 3.8% to 13.75 pence per share on Thursday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
SolGold (SOLG)