Regis’ Share Price Declined after Sending Acquisition Proposal to Capricorn

  • Sep 24, 2018 AEST
  • Team Kalkine
Regis’ Share Price Declined after Sending Acquisition Proposal to Capricorn

Regis Resources Limited (ASX: RRL) saw its share price declining by 6.76% on 24 September 2018 after the company confirmed that it has been in talks with Capricorn and the company has put forward an acquisition proposal to Capricorn Metals Limited. The company has put forward confidential, indicative and incomplete proposal to acquire 100% of the issued and to be issued shares in Capricorn Metals. The indicative proposal reflects for making an offer of 11.4 cents in Regis shares per Capricorn share (Proposal), a premium of 93.2% to the closing Capricorn’s share price as on 21 September 2018. Meanwhile, the share price of Capricorn increased by 50.8% as on 24 September 2018 (4:30 PM AEST).

Before announcing a binding offer, Regis requires the recommendation of the Board of Capricorn, the support of Capricorn’s major shareholders, and execution of a binding implementation agreement. While the Board of Capricorn has confirmed to Regis that it would unanimously recommend the Proposal and significant shareholders Nedlands Nominees Pty Ltd and Centrepeak Resources Group Pty have indicated their support; Capricorn’s largest shareholder, Hawke’s Point which is having a 18.9% interest is not yet prepared to support the Proposal. Regis is scheduled to meet representatives of Hawke’s Point in the coming week to take a decision whether it will be possible to gain Hawke's Point's support for the Proposal.

Regis reserves the right to end discussions regarding the potential acquisition of 100% of the issued and to be issued shares in Capricorn until the support of Hawke’s Point is obtained. The company has informed that there is no certainty that an agreement will be reached which will end up in a binding offer being made to Capricorn shareholders.

The company is reserving its right to make an offer, or further proposal, for 100% of Capricorn if a third party proposes or makes an alternative offer for Capricorn. If the above preconditions to making a binding offer are satisfied, the offer would be subject to customary terms and conditions to be finalized but including 90% minimum acceptance, acquisition or cancellation of all options, no material adverse change and no prescribed occurrence conditions. 

Recently, Regis’ board announced two key appointments as a result of board and management succession planning. Mr. Jim Beyer has been appointed as Chief Executive Officer and Managing Director, effective from 15 October 2018 and Mr. James Mactier as Non-Executive Chairman- elect, effective at the end of the 2018 Annual General Meeting.

For the year end 30 June 2018, the company earned a record profit before tax of $248.9 million which was 27%($53m) higher than the previous year. It was largely due to increase in the gold production by 11% and continuing cost control at Duketon operation. The EBITDA is $312.5 million in FY 2018 which was $253.3 million in FY2017. The profit after tax also increased by 26% on last year to $174.2 million in FY 2018. The cash flow from operating activities was very strong this year at $259.7 million which was 26% higher than the previous year due to increased production and lower operating cost. Also, for FY2018, the company has declared a fully franked dividend of 8 cents per share which is payable on 26 September 2018.

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