The directors of CBH Resources has recommended the a revised takeover offer from its major shareholder Toho Zinc, in favour of a bid from Belgian miner Nyrstar.
The Nyrstar proposal of 19.5 cents per share is conditional on it successfully acquiring all of CBH’s convertible notes, of which Toho holds 50.6%.
According to CBH, Toho has advised it will not support the Nyrstar offer, either as a noteholder or shareholder.
“Given the voting thresholds that apply under a scheme of arrangement, the notes scheme of arrangement would clearly fail,” the company said.
“The independent committee considers that the revised Nyrstar proposal cannot be successful in its current form, and does not recommend the proposal to shareholders.”
Toho is offering a proportional bid of 25 cents per share, on the condition that shareholders first approve the $67.5 million joint venture for CBH’s Rasp project at Broken Hill.
The Japanese company, which currently holds a 23.1% stake in CBH, would cap its holdings at 49.9% should its offer be accepted.
According to CBH, the Toho offer will provide shareholders with the ability to sell a significant proportion of their shares, which is expected to be approximately 26.5% to 28.5%.
It also represents a 28% premium to Nystar’s 19.5 cents offer and a 78.6% premium to the 14 cent closing price on 11 March.
“Toho’s revised proposal will provide shareholders with the best of both worlds,” CBH managing director Stephen Dennis said.
“Shareholders will be able to receive significant near term gains on a portion of their shares and they will also have the opportunity to participate in the future growth of the company through the development of the Rasp Project and the planned increase in production at the Endeavor Mine.
The de-levering of the company, along with Toho’s undertaking to support CBH in financing the Rasp Project, will also ensure that this important new mine is brought quickly into production.
CBH shareholders will meet in April to decide on the Rasp joint venture.