Australian explorer Verdant Minerals (ASX: VRM) has entered into a scheme implementation agreement with UK-based private equity firm CD Capital Natural Resources Fund III LP which may see the junior eventually delist from the ASX.
If approved, the agreement will inject much-needed funds into the financially-strapped junior’s wallet, providing capital for the advancement of Verdant’s flagship Ammaroo phosphate project in the Northern Territory.
It will also result in CD Capital becoming the majority shareholder of Verdant, alongside Australian public entity and current shareholder Washington H Soul Pattinson & Company Limited.
Verdant managing director Chris Tziolis said the funds required for Ammaroo are substantial, and unlikely to be raised from existing shareholders and without very significant dilution.
He said the scheme implementation agreement represents an opportunity for shareholders to realise “immediate value” for their investment at a significant premium to Verdant’s recent trading price.
“The offer from CD Capital represents [a considerable] premium to our current share price and is demonstrably accretive to our shareholders on the basis of [our] share price and market capitalisation,” he said.
“Subject to an independent expert’s report and in the absence of a superior competing proposal, I have voted with my fellow directors to recommend CD Capital’s proposal to [our] shareholders.”
Under the proposed scheme, CD Capital will acquire all of the issued shares in Verdant, except for those held by Washington H Soul Pattinson & Company (ASX: SOL).
Should the scheme be implemented, Verdant shareholders will receive $0.032 per share held at the scheme’s record date, valuing Verdant at $40.5 million on a fully-diluted basis.
The valuation represents a 113% premium to the closing price of Verdant’s shares on 8 March of $0.015, and a 110% premium to its 30-day volume weighted average price of $0.0152.
At completion of implementation, CD Capital will hold approximately 67% of the shares in Verdant and WHSP will hold the remaining 33%.
A shareholders’ agreement between CD Capital, WHSP and Verdant to govern the management of the company will come into effect following implementation of the scheme.
At that point, it is anticipated that Verdant would be delisted from the ASX.
Verdant and CD Capital have entered into a short-term loan facility agreement, whereby CD Capital will advance an aggregate of $800,000 in three tranches to Verdant for the purpose of funding transaction costs related to the scheme and for general working capital purposes.
Interest will be payable on the amount drawn under this facility at a rate of 6% per annum, and the facility will mature in 12 months.
At mid-afternoon trade, shares in Verdant Minerals were up 100% to $0.03.