European Nickel PLC and Rusina Mining NL announced that they have signed a merger implementation agreement whereby European Nickel proposes to acquire the entire issued share capital of Rusina by way of a Scheme of Arrangement under the Australian Corporations Act.
Transaction Summary
1. In consideration for the transaction, Rusina shareholders will be offered four European Nickel new ordinary shares for every five Rusina ordinary shares they own. The Scheme is subject to Australian court approval and approval by Rusina's shareholders.
2. The Exchange Ratio represents a 15.5% premium to Rusina's last 10 day's ASX Volume Weighted Average Share Price of AUD 0.0933 per share and values Rusina at approximately AUD 32.7 million based on European Nickel's last 10 days VWAP of GBP 0.0745 per share. Based on the last 30 days VWAP for each company the premium is 27%.
3. The ultimate value of the offer is capped at GBP 27.1 million, a 50% premium to the Initial Offer. If an adjustment is made as a result of the Value Cap, the offer would represent a 73.3% premium to Rusina's 10 day VWAP prior to the date of the MIA. A description of the Value Cap is shown below.
4. Holders of Rusina share options will be offered New Shares in consideration for the cancellation of their Rusina options, based on the calculated value of each series of options. In total 6,425,329 New Shares will be offered to option holders.
5. The Rusina directors unanimously recommend that Rusina shareholders vote in favor of the proposed Scheme, and each director intends to vote all of the Rusina shares they own or control at the date of the Scheme meeting in favor of the Scheme, in the absence of a superior proposal.
6. Upon completion of the Scheme and the Placing, and under the terms of the Initial Offer, current Rusina shareholders will own approximately 27.3% of the merged company.
7. European Nickel plans to establish an Australian listing of its shares through ASX listed CHESS Depositary Interests such that Rusina shareholders can trade the New Shares they receive on the ASX.
8. On completion of the Scheme certain changes will be made to the composition of the Board, including the appointment of a new Managing Director, which are detailed below.
9. In a related transaction, European Nickel has also announced that it has placed 172.4 million new ordinary shares at 7.0 pence each to raise gross proceeds of approximately USD 19.4 million and an estimated additional 1.25 million new ordinary shares in lieu of interest on the loan provided by Endeavour Financial Corporation.
Benefits of the Merger
The merger will create a larger, stronger company that will be better able to finance its development projects and grow into a mid-tier nickel producer. The merger is considered by the Boards of Rusina and European Nickel to be a logical outcome of the joint venture between European Nickel and Rusina at the Acoje nickel project in the Philippines and consolidates the ownership structure of the project ahead of critical development and financing decisions.
1. Improved access to development capital through enlarged balance sheet, increased share liquidity and ASX listing.
2. Strengthened management team - a management team with a track record of success in international project development and the organizational depth to develop two projects in quick succession.
3. Creates a significant nickel development company with a substantial JORC resource base of 1.35 million tonnes of contained nickel and a medium term nickel production target of 50,000 tonnes per annum.
4. Geographical and project diversification across Turkey, the Philippines and Albania.
5. Ability to pursue further growth opportunities.
6. Enables savings in corporate overheads and cost savings from the rationalization of the Acoje joint venture into a simpler corporate and operational structure.
European Nickel currently has a 20% interest in the Acoje project, with a right to earn up to 40%, while Rusina currently has a 72% interest in the project. A Definitive Feasibility Study is due to be completed in 2011. Acoje is European Nickel's next planned heap leach project for commercialization, after the Qaldag project in Turkey.
