Fortescue Metals Group has raised concerns about “misleading statements” in Hancock Prospecting’s bidder’s statement for its proposed $390 million acquisition of Atlas Iron.
The Takeovers Panel yesterday received an application from Fortescue-subsidiary NCZ Investments in response to last week’s 4.2 cent a share offer for Atlas Iron from Hancock subsidiary Redstone Corporation.
NCZ Investments wants the Takeovers Panel to stop Hancock Prospecting from releasing the bidder’s statement due to series of concerns, such as the misleading statements.
Fortescue, through NCZ Investments, holds a 15 per cent interest in Atlas and a further 4.9 per cent share through a cash settled equity swap. Redstone, meanwhile, has a 19.96 per cent stake in Atlas.
The NCZ Investment application to the Takeovers Panel outlined that Redstone’s bidder’s statement for the Atlas deal has “misleading statements and material omissions regarding Redstone’s intentions in relation to Atlas’s business, assets and employees and Redstone’s ability to achieve those intentions.”
It added the statement included “material omissions regarding the implications of Redstone’s takeover bid for Atlas’s Term Loan B Facility and Hancock Prospecting’s intentions in respect of financing the repayment of that facility” and “misleading statements about the merits, terms and operation of Redstone’s takeover bid.”
According to NCZ Investments, the “combined operation of the identified misleading statements and omissions and the structure of Redstone’s bid has a coercive effect on Atlas shareholders to accept the bid (or sell on-market potentially to Redstone).”
NCZ Investments is seeking interim orders to stop Redstone from dispatching its bidder’s statement and from releasing further information on the bid while the Takeovers Panel considers the application.
The Fortescue subsidiary also wants Redstone to provide “corrective disclosure” through a replacement bidder’s statement, while also suspending any further purchase of Atlas shares.
Both Hancock and Fortescue increased their stakes in Atlas Iron earlier this month. Their moves followed a $280 million bid for Atlas Iron from Mineral Resources in April, an offer that was snuffed out by Hancock’s $390 million proposal.