September 08, 2008

Pallinghurst demands break up fee from ConsMin

Australia Consolidated Minerals Ltd said the Pallinghurst consortium has demanded that it pays a breakup fee of AUD 10.8 million. The demand comes after the manganese miner's board on September 13th 2007 withdrew its recommendation of the Pallinghurst bid in favor of a sweetened AUD 1.03 billion takeover offer from Palmary Enterprises Ltd.

A person close to the consortium said that but the break fee demand does not indicate that Pallinghurst has withdrawn from the takeover battle. He said that "The Pallinghurst offer is still open and capable of acceptance; it still stands. The break fee is payable on a change of recommendation, so it is good practice to get money when it is due."

Earlier Palmary has offered AUD 4.50 a share, beating its previous bid of AUD 3.95 and topping Pallinghurst's offer of AUD 4.1. its proposal contains an unusual top up mechanism, which will see investors who have accepted its offer receive extra payments to match higher rival bids. The consortium, which has a 6.2% stake in Consolidated Minerals Ltd has extended its offer to September 22nd 2007.