The boards of Ruukki Kermas and Chromex announced that they have reached agreement on the terms of a recommended cash offer by Synergy Africa to acquire the entire issued and to be issued share capital of Chromex.
Synergy Africa is a newly incorporated company 51%, owned by Ruukki and 49%, owned by Kermas, which has been established for the purposes of making the offer.
The offer will be on the basis of 36.5% per Chromex Share. The offer values the entire issued and to be issued share capital of Chromex at approximately GBP 37 million and represents a premium of 82.5% to the closing price of 20 pence per Chromex Share on July 14th 2010 and a premium of 83.4% to the average Closing Price during the 90 day trading period up to and including July 14th 2010 (being the last Business Day prior to the commencement of the Offer Period).
Synergy Africa also intends to make an offer to acquire the Chromex Warrants on the basis of 16.5 pence per Chromex Warrant in cash and will make appropriate proposals to holders of Chromex Share Options as soon as practicable after the Offer Document has been published.
The Chromex Directors, who have been so advised by Panmure Gordon, consider the terms of the Offer and the Warrant Offer to be fair and reasonable. In providing advice to the Chromex Directors. Panmure Gordon has taken into account the Chromex Directors' commercial assessments. The Chromex Directors intend to recommend unanimously that Chromex Shareholders accept the Offer and that holders of Chromex Warrants accept the Warrant Offer, as the Chromex Directors and their connected parties have irrevocably undertaken to do so in respect of their own beneficial holdings in Chromex comprising, in aggregate 10,050,000 Chromex Shares, representing in aggregate approximately 11.3%, of the existing issued share capital of Chromex.
In addition, Synergy Africa has received irrevocable undertakings to accept, or procure the acceptance of the Offer from certain other Chromex Shareholders in respect of in aggregate 35,975,000 Chromex Shares, representing approximately 40.4% of Chromex's existing issued share capital. Accordingly, Synergy Africa has received irrevocable undertakings to accept, or procure the acceptance of. the Offer in respect of in aggregate 46,025,000 Chromex Shares, representing approximately 51.7% of Chromex's existing issued share capital.
Mr Alwyn Smit CEO of Ruukki said that "The acquisition of Chromex is a logical transaction as it achieves all three of our strategic objectives: it completes the vertical integration of our South African business, it increases our production capacity and it expands our market share. By acquiring an accessible, sizeable resource base and a producing mine at Stellite, we are consolidating our presence in one of the world's premier chromite mining regions, adding immediate value to our existing operations and laying the foundations for future growth."
He added that "Looking ahead to the medium term, Chromex provides a critical building block for our processing growth plans, particularly the construction of two 70MW DC furnaces, which will have a planned combined annual capacity of up to 280.000 tonnes, and we will be examining the opportunity for building these DC furnaces at Stellite."
Mr Russell Lamming CEO of Chromex said that "Naturally we are delighted to have received this all cash offer for Chromex. Chromex has developed into a cash generative chrome producer in southern Africa with assets that now require further investment and returns on this investment will take several years. In addition to the large premium to Chromex's recent share price, the offer removes the uncertainties inherent in any further investment by Chromex shareholders, who will be achieving a significant and certain return on their investment immediately. I am very pleased to be able to announce this offer and to recommend it to our shareholders."
