Core Lithium initiates trading halt on proposed $6.5m takeover of Charger Metals

Core Lithium (ASX: CXO) has entered into a trading halt following news of a takeover offer for Charger Metals (ASX: CHR).

The company requested the trading halt be placed on its securities effective immediately, pending the release of a response to the Charger announcement.

Charger revealed in a company update this morning that it had received an unsolicited, non-binding, conditional, indicative offer from Core to acquire ownership of the company.

Indicative offer

Core’s $6.5 million offer was for the acquisition of the entire share capital of Charger through an indicative offer of 0.9 of a fully paid ordinary Core share for each fully paid ordinary share in Charger, valuing Charger at $0.084 per share.

While this translates to a 23% premium to the closing price of Charger shares on 16 August 2024, or 35% using the 5-day volume-weighted average price for Charger and Core shares on the same date, the Charger board believes that the offer’s terms do not fully reflect the company’s value and prospects.

Charger stated that the mechanism for the proposed transaction was by way of a recommended scheme of arrangement under which the two would work towards executing a definitive scheme implementation deed as soon as possible.

Continued engagement

“The Charger board remains open to continued engagement with Core should it wish to do so, with a view to pursuing the best outcome for Charger shareholders,” the company stated.

The board also mentioned that it intends to continue dialogue with other parties with which it is already engaged.

Charger’s report of the Core offer comes after it commenced strategic discussions regarding its Bynoe lithium project in the Northern Territory, as well as merger and acquisition discussions at the corporate level.

Core was among several companies Charger had engaged with that had expressed interest in Charger and Bynoe.

Investment initiative

The discussions were part of a process the company commenced last year to investigate whether it could obtain better funding terms for its Lake Johnston and Bynoe projects from strategic investors than those currently available in equity markets due to the decline in global lithium prices.

That plan led to the company completing a farm-in agreement with Rio Tinto (ASX: RIO) in January, under which subsidiary Rio Tinto Exploration (RTX) may earn 51% by solely funding $10 million in exploration expenditure and paying Charger minimum further cash payments of $1.5m.

RTX can earn 75% by solely funding $40m in exploration expenditure or completing a definitive feasibility study.