Iluka could add a cash component to its offer for Kenmare
Iluka Resources, the ASX-listed mineral sands miner, could add a cash component to its offer forKenmare Resources, the UK-listed miner, the Australian Financial Review reported.
Kenmare has rejected an offer of 0.036 new shares for each Kenmare share, which sources claimed Iluka brought directly to Kenmare’s investors. Kenmare claimed that the offer failed to recognise the value of its Moma titanium mine in Mozambique.
According to the report, unnamed sources claimed that Iluka’s board is expected to meet this week to consider lodging a partially cash-funded offer to help get the offer off the ground.
The report cited JPMorgan analyst Mark Busuttil as saying that Iluka likely has the financial capacity to fund an all-cash offer, but that, due to poor prices and low cash generation, any offer is likely to be partly scrip-based. The item also cited Deutsche Bank analyst Chris Terry as saying that Kenmare’s rejection will likely prompt Iluka to improve its terms, possibly by including a cash component.
The paper said that Iluka, which has existing debt facilities of almost AUD 700m (USD 656m), could opt for a 50-50 cash and scrip bid.
The report noted that Iluka investors have supported the company’s efforts to secure quality assets. The paper cited Jason Beddow, managing director at Argo Investments, an Iluka investor, as saying that the group supports Iluka’s efforts to secure assets during the current low point in the mineral sands cycle.
Source Australian Financial Review