Chinese company launches hostile takeover of Carabella

Queensland coal miner Carabella Resources on Thursday received an unsolicited bid from a privately owned Chinese based coal company.

A takeover bid was made by Wealth Mining, a subsidiary of China Kingho Energy Group, offering $0.42 per share.

At the time the off-market all cash takeover offer was made Carabella shares were trading around the $0.20 per share mark but overnight have spiked to $0.44 per share.

Wealth Mining already holds an 11.06 per cent stake in Carabella.

Announcing the offer Kingho chairman and founder Quinghua Huo said acquiring Carabella is an important first step in his company’s strategy to develop an Australian asset base.

“We believe that our offer provides compelling and certain value for Carabella shareholders at a time when there is significant illiquidity in Carabella’s shares and uncertainty over the funding and development pathway Carabella’s assets,” Huo said.

Wealth Mining claims it originally submitted a confidential and non-binding proposal containing similar terms to yesterday’s takeover bid on December 3 but has not received a satisfactory written response in an acceptable timeframe.

Carabella has responded to the hostile takeover offer, telling the ASX it will be taking no action at this time.

“Shareholders need take no action in relation to the offer,” the company said in a statement.

“The board is considering its position in relation to the offer and will set out its recommendation in the company’s target statement which is expected to be despatched to shareholders early in 2014.”

The explorer added that is also fielding an undisclosed number of expressions of interests from other parties.

Wealth Mining’s Australian based deputy chairman Ian Hutchinson said the company has been unable to progress discussions with the Carabella board and as such has submitted the offer directly to shareholders.

“Wealth Mining still desires a constructive dialogue with the Carabella Board and remains open to seeking a pathway to a recommended transaction,” Hutchinson said.

The company urged shareholders to accept the offer saying it is an “attractive exit opportunity”.

“Carabella shareholders who accept the offer will cease to have exposure to the risks and uncertainties facing Carabella,” Wealth Mining said.

The offer is however subject to conditions – including a 57 per cent minimum offer acceptance from existing shareholders and requires Chinese government approval.

Carabella has appointed UBS as its financial advisor.

The company has interests in five coking coal projects across Queensland, with its Grosvenor West and Bluff projects both located in the Bowen Basin.

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