The Takeovers Panel has received an application from Zentree Investments following Energy Resources of Australia’s (ERA’s) launch of a share entitlement offer last week.
ERA announced plans to raise $476 million to cover the rehabilitation of the Ranger uranium mine in Northern Territory last Friday.
Zentree has submitted the application because it believes minority shareholders are not being given equal or reasonable opportunity to participate in the benefits flowing to Rio Tinto.
It also stated, “there has been inadequate disclosure as to the need, size and urgency of the entitlement offer and there is no serious dispersion expectation for the entitlements or new shares.”
The applicant seeks that ERA cancels the entitlement offer and refunds any subscription money received and that any underwriting agreement between ERA and Rio Tinto’s wholly owned subsidiary North Limited is axed, without any penalties to ERA.
It is also requesting ERA is restrained from entering into any transactions or issuing shares to any party if it may result in that party gaining voting power of more than 20 per cent within the company.
Zentree has also sought orders in the interim that would delay the entitlement offer’s period, prevents closing off the offer and issuing any new shares to any party connected with the entitlement offer.
The Takeovers Panel has stressed that a sitting panel has not been appointed yet and no decisions have been made on whether or not proceedings will go ahead.
ERA offered new fully paid ordinary shares valued to shareholders for $0.15 per share.
As ERA’s largest shareholder, holding 68.39 per cent of voting power in ERA, Rio Tinto subscribed to its full entitlement of around $326 million.
Rio Tinto also acted as the underwriter for the offer as ERA was not able to do so.
ERA has said it will keep its shareholders updated on any developments regarding the panel application.