Cerillion Regulatory News (CER)

12 Oct 2007 07:01

Celtic Resources Holdings PLC12 October 2007 Celtic Resources Holdings Plc Letter to Shareholders The below is the text of a letter being posted today to shareholders of CelticResources Holdings Plc: "Dear Fellow Shareholder, REJECT SEVERSTAL'S PROPOSED OFFER Background On 5 September 2007, Severstal approached your Board with an unsolicited andhighly conditional potential offer of 220 pence per share for the entire issuedshare capital of Celtic Resources Holdings Plc ("Celtic" or the "Company"),which your Board unanimously rejected. On 19 September 2007, Severstal acquiredshares in the Company at a price of 232 pence per share. On 27 September 2007,the Company announced that a third party, other than Severstal, had approachedCeltic with a view to making an offer for the Company. On 28 September 2007,Severstal announced its intention to make an offer for Celtic at 270 pence pershare. Your Board, who are being advised by Gleacher Shacklock LLP and Strand PartnersLimited, unanimously consider that Severstal's proposed offer of 270 pencesignificantly undervalues Celtic. Severstal has still to dispatch its formal offer document, but has taken theextraordinary step of sending you a letter urging you to accept its offer,before it has been made. Accordingly, your Board felt it was appropriate towrite to you now, rather than wait until Severstal sends you its formal offerdocument. I will continue to keep you informed of all material developmentsduring the course of the offer. Celtic's key attractions Severstal's proposed offer of 270 pence per share fails to recognise theCompany's excellent strategic position, planned growth in production against abackground of a high and rising gold price and our cash rich balance sheet. Severstal is trying to buy Celtic cheaply. It is trying to take possession of: • A highly experienced management team with a strategy for driving shareholder value• An excellent portfolio of assets, with gold production expected to reach 90,000 ounces in 2007 and planned to rise substantially in 2008; and molybdenum production anticipated to reach 1.5 million pounds in 2007• The proven ability to use the technologically advanced biological process for gold recovery (BIOX(R)) for gold production in the Former Soviet Union• A track record of generating profits from the trading of mining assets• A strong financial position, with cash of US$34.4 million at 30 June 2007, and a further US$26.5 million in cash received for the sale of Miheevskoye at the end of July 2007• Direct exposure to the financial benefits of a high gold price Celtic's prospects as an independent company are excellent. Severstal is tryingto buy Celtic without paying for these prospects. You should not acceptSeverstal's proposed offer. Response to Severstal's letter of 8 October 2007 In its letter which was sent to you on 8 October 2007, Severstal made a numberof assertions which we can refute. (a) Severstal wants you to believe that Celtic's Board did not properly consider its proposed offer on 28 September 2007. We did. Severstal first approached the Company more than 3 weeks beforehand, on 5 September 2007. The uncomfortable truth for Severstal is that your Board, and its advisers, unanimously consider that 270 pence per share significantly undervalues your Company. (b) Severstal claims that Celtic's board has a "confused strategy". When Severstal first became a shareholder in Celtic in August of this year, it went out of its way to praise Celtic's management team. In its announcement of 14 August 2007, it said, "We think particularly highly of Celtic's management". It has changed its tune since it decided to try to buy the Company. (c) Severstal asserts that if its proposed offer fails, there is a likelihood that the share price of Celtic will fall significantly. Severstal cannot know this. It is also choosing to ignore the gold price - between 1 January 2007 and 17 September 2007 (the day prior to our announcement of an approach), the gold price rose by approximately 13% and Celtic's share price by approximately 24%. Your Directors consider that the combination of rising gold production levels and a high gold price will continue to underpin a strong Celtic share price in the absence of any offer. (d) Severstal has implied that I, your Chairman, sold shares in Celtic during the summer. I did not, and Severstal knows this to be the case. Conclusion Your Board, which has been so advised by Gleacher Shacklock LLP and StrandPartners Limited, believes that Severstal's proposed offer significantlyundervalues Celtic and unanimously recommends that you should take no action inrelation to the proposed offer. In providing advice to the Board, GleacherShacklock LLP and Strand Partners Limited have placed reliance upon the Board'scommercial assessments. Your Directors' intention is not to accept Severstal's proposed offer in respectof their own beneficial shareholdings, amounting in aggregate to 5,844,462shares, equivalent to 10.47% of the Company's issued share capital. When Severstal does send you its offer document and accompanying form ofacceptance, do not complete it. In short, DO NOTHING. I will continue to keep you informed of all material developments during thecourse of the offer and will be writing to each of you again once the Severstaloffer document is published. Yours sincerely, Peter HannenChairman An information line has been set up for shareholders' enquiries. Pleasetelephone 00 800 6610 6610. This is a free phone line for shareholders locatedin the UK and Ireland." Enquiries Celtic Resources Holdings PlcKevin FooJonathan Scott-BarrettTel: + 44 (0)20 7921 8800 Gleacher Shacklock LLPKieran MurphyTel: +44 (0)20 7484 1150 Strand Partners LimitedSimon RaggettStuart FaulknerTel: +44 (0)20 7409 3494 Cardew GroupAnthony CardewShan Shan WillenbrockTel: +44 (0)20 7930 0777 / (0)777 072 0389anthony.cardew@cardewgroup.com Conduit PRLeesa PetersJane StaceyTel: +44 (0)20 7429 6606 / (0)792 292 3306leesa@conduitpr.com Other information Any person who is the holder of 1 per cent. or more of any class of shares inCeltic may be required to make disclosures pursuant to Rule 8.3 of the IrishTakeover Panel Act, 1997, Takeover Rules 2001 to 2006. The Directors of Celtic accept responsibility for the information contained inthis announcement, save that the only responsibility accepted by the directorsof Celtic for information relating to Severstal and Centroferve Limited, whichhas been compiled from published sources, has been to ensure that suchinformation has been correctly and fairly reproduced or presented (and no stepshave been taken by the directors of Celtic to verify this information). To thebest of the knowledge and belief of the Directors of Celtic (having taken allreasonable care to ensure that such is the case), the information contained inthis announcement for which they accept responsibility is in accordance with thefacts and, where appropriate, does not omit anything likely to affect the importof such information. Gleacher Shacklock LLP is acting exclusively for Celtic and no one else inconnection with the offer and Gleacher Shacklock LLP will not regard any otherperson as a client in relation to the offer and will not be responsible toanyone other than Celtic for providing the protections afforded exclusively toits clients or for providing advice in relation to the offer, the contents ofthis letter or any transaction or arrangement referred to herein. Strand Partners Limited is acting exclusively for Celtic and no one else inconnection with the offer and Strand Partners Limited will not regard any otherperson as a client in relation to the offer and will not be responsible toanyone other than Celtic for providing the protections afforded exclusively toits clients or for providing advice in relation to the offer, the contents ofthis letter or any transaction or arrangement referred to herein. Sources and bases for information: (i) The information contained in the first paragraph of this announcement is sourced from stock exchange announcements on the relevant dates (ii) Celtic's 2007 gold and molybdenum production targets have been sourced from Celtic's 2006 annual report and accounts and its 2007 interim report (iii) Celtic's cash position is stated as at 30 June 2007 as per its 1st half 2007 interim report. The amount of proceeds and date of completion for the sale of the Company's shareholding in the Miheevskoye project are sourced from a stock exchange announcement made by the Company on 31 July 2007 (iv) The data underlying the movements in the gold price and Celtic's share price between 1 January 2007 and 17 September 2007 have been sourced from Bloomberg. The gold price is the closing gold spot price on the London Metal Exchange on 1 January 2007 (US$636.8/oz) and 17 September 2007 (US$717.9/oz). The Celtic share price is its closing price on 2 January 2007 (164p) (as it was not traded on 1 January 2007) and 17 September 2007 (203p) (v) The number of shares beneficially held by Celtic's Directors has been sourced from the Company. The percentage of the Company's issued share capital has been calculated based on 55,827,026 shares outstanding This information is provided by RNS The company news service from the London Stock Exchange