Caledon Resources (CDN) announces possible merger with Polo Resouces Ltd (PRL)

Caledon Resources (CDN) announces possible merger with Polo Resouces Ltd (PRL)

Possible Merger of Polo Resources Limited  and Caledon Resources plc

Summary

  • The Boards of Polo and Caledon have reached an in principle understanding regarding a potential combination of the two companies
  • If it proceeds, Polo will make an all share offer for the entire issued and to be issued share capital of Caledon at an exchange ratio of 11.4 Polo Shares for every Caledon Share
  • The Possible Offer is subject to the waivable pre-conditions set out below and is expected to be effected by way of a scheme of arrangement by Caledon
  • If it proceeds, the merger would create a coal-focused natural resources company with investments in geographically diverse exploration and development projects and direct exposure to current high coking coal prices through the producing Cook mine


The Board of Polo Resources Limited and the independent directors of Caledon Resources plc are pleased to announce that they have reached an in principle understanding (the "Possible Offer") regarding a possible merger of the two companies, to be effected by a scheme of arrangement by Caledon. The Caledon Independent Directors have indicated that they are supportive of the Possible Offer and the Merger, and that their current intention is that, if the Possible Offer proceeds on the same terms to a firm offer pursuant to Rule 2.5 of the Takeover Code, they will unanimously recommend such offer.

Under the terms of the Possible Offer and subject to a number of pre-conditions, Polo would be prepared to make an all share offer for the entire issued and to be issued share capital of Caledon at an exchange ratio of 11.4 Polo Shares for every Caledon Share.  Based on the exchange ratio and the closing price of Polo Shares on AIM of 5.40 pence on 26 April 2010, the implied offer price for each Caledon Share would be 61.56 pence.  This represents a premium of 14.53 per cent to the closing price of Caledon Shares on AIM on 26 April 2010 and 12.77 per cent to the volume weighted average price of Caledon Shares on AIM for the 20-trading day period ending on 26 April 2010.

Commenting on the Possible Offer, Neil Herbert, Executive Chairman of Polo, said: “The transaction will provide all Polo shareholders with a renewed focus and direct exposure to the coking and thermal coal markets through 100% ownership of the Cook mine and the Minyango project.” 

Mark Trevan, Managing Director of Caledon, added: “The proposed combination offers diversification for Caledon shareholders through Polo's investments in resource companies and its joint venture in Mongolia, while retaining shareholders’ exposure to the upside potential contained within our Cook mine and Minyango project.  The combined strength of Polo and Caledon’s balance sheets will also reduce the risk inherent in financing the development of the Minyango Project.  Access to Polo’s strong management team with particular emphasis on capital markets experience will also be a major benefit.”

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