Sibanye-Stillwater makes off-market takeover bid for ailing New Century Resources
Ailing base metals producer New Century Resources (ASX: NCZ) has been approached by major shareholder Sibanye-Stillwater with an off-market takeover proposal designed to bail the company out of its financial woes.
According to Sibanye, New Century’s balance sheet is under strain due to amortisation requirements of an environmental bond facility for the Century zinc mine and potential funding needs for growth projects including the Silver King lead-zinc-silver deposit in Queensland and the Mt Lyell copper mine in Tasmania.
It is believed the company may need to raise additional equity which could result in a material dilution for existing shareholders in light of New Century’s current share price, broader equity market conditions and limited trading liquidity on the Australian Stock Exchange.
Sibanye said it had also become aware that a number of New Century shareholders were planning to dispose of their holdings on market, despite the limited trading rules.
“As a shareholder in New Century, motivated to support a liquid market for New Century’s shares,” it said.
“ to put an end to the downward trajectory of shareholder value and facilitate New Century shareholders being able to dispose of their holdings in an orderly manner.”
The board of New Century has recommended shareholders take no action at this point.
Under the terms of the takeover, Sibanye will seek to acquire all of the fully-paid ordinary shares in New Century that it does not already own or control, at a best and final price of $1.10 each.
The price reflects a 42.9% premium on the closing price of New Century shares prior to the takeover announcement; a 21.5% premium to the one month volume weighted average price to 20 February; and a 20.6% premium to the three-month VWAP to the same date.
Sibanye said the offer delivers “certain value” in the form of cash consideration and a liquidity opportunity for New Century shareholders.
The takeover will be conducted by its wholly-owned subsidiary Sibanye Resources Australia Pty Ltd.
On-market buy order
In addition to the off-market offer, Sibanye Resources Australia is expected to place a buy order with the ASX today to acquire 14.3 million shares (or 10.92% of total shares on issue) at or below a price of $1.10 each during the bid period.
The on-market buy order will give New Century shareholders looking to sell their shares an opportunity to dispose of their holdings and receive payment within days of the transaction.
If one or more New Century shareholders sell into the on-market order (or otherwise accept into the offer) for an equivalent quantity of shares, Sibanye’s equity would increase to around 30%.
Sibanye said regardless of the takeover outcome, it would continue advocating for New Century to turn its strategic direction back to focusing on a tailings assessment management service, which could play a key role in the green metals supply chain.
Sibanye acquired its interest in New Century in 2021 at a time when New Century was planning to increase its exposure to the circular economy by growing its global tailings retreatment and recycling presence.
New Century has weathered a 59% decline in its share price over the past six months, implying that its current business strategy has not been well received by shareholders and investors.