RE: Sprott Email Today10 Feb 2023 09:41
Also an important distinction to make is that Shaun's email said 'first right of last refusal' so LAST not FIRST refusal and that an overall sale of Newcrest won't trigger the option.
https://legalvision.com.au/right-of-last-refusal/#:~:text=A%20right%20of%20last%20refusal%20is%20a%20preemptive%20right%20to,when%20considering%20any%20future%20transactions
Excerpt:
Right of Last Refusal
A right of last refusal is a preemptive right to receive a particular benefit in preference to any other party. A right of last refusal is embedded into earlier contracts between parties, and gives one party the right to match an offer made by a third party when considering any future transactions.
For example, imagine that you are a manufacturer of car parts. Imagine also that you have previously entered into an agreement with XYZ Motors to manufacture and supply them with 100 units of an exhaust at $1.50 per unit. Your agreement with XYZ Motors contains a right of last refusal for any future orders relating to that same exhaust. XYZ Motors are now in the market for another 150 units of the same exhaust, and have received an offer from ABC Manufacturers to manufacture the exhaust for $1.30 per unit. As you have the right of last refusal granted to you as a continuing obligation from your previous contract, XYZ Motors must present the offer from ABC Manufacturers to you. By doing so, XYZ Motors effectively gives you the opportunity to match that offer and they must refuse the offer from ABC Manufacturers. As a result, XYZ Motors must instead contract with you for the supply of these additional units. Indeed, only if you refuse to match the offer received from ABC Manufacturers can XYZ Motors enter into a contract with them.
How Does This Differ From a Right of First Refusal?
In contrast, a right of first refusal requires that the party receiving the benefit of the right be given the first option to enter into a particular transaction. Only if this party chooses not to exercise their right can the other party then go to market and seek additional offers. You will more likely see a right of first refusal in commercial contracts in comparison to a right of last refusal.
Following on from our previous example, imagine that the contract between you and XYZ Motors contained a right of first refusal. In this case, XYZ Motors would have been obligated to allow you to make an offer first, before seeking offers from third parties.
You may also see a right of last refusal in shareholders agreements. A shareholder wishing to sell their shares must first offer those shares to the other shareholders in the business. If those other shareholders choose not to exercise their option to purchase these shares, only then can the original shareholder look for other offers.
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