AsiaPhos eyes gold and copper miner MMJV in reverse takeover
Issue and allotment of shares to seller can reach up to S$72m
Singapore
CHINA-FOCUSED phosphate miner AsiaPhos Limited on Friday said it is looking to acquire the entire stake in gold and copper miner MMJV, in a deal that will constitute a reverse takeover of the former.
AsiaPhos plans to issue and allot to the seller its ordinary shares at 0.5 Singapore cent each, totalling either S$72 million or half of the agreed valuation of the target group, whichever is lower.
The agreed issue price is at a 75 per cent discount to the weighted average trading price of AsiaPhos shares of 2.17 cents on the market day before AsiaPhos signed the term sheet on Tuesday with Mining and Minerals Industries Holding (MMIH) for the proposed acquisition.
It was determined based on, among other things, the parties' perceived value of AsiaPhos of S$8 million and the outstanding payables to AsiaPhos chief executive officer Ong Hian Eng and AsiaPhos subsidiary Norwest Chemicals.
The AsiaPhos group owed S$750,000 to Dr Ong as at Friday and S$2.8 million to Norwest as at June 30. Under the proposed deal, MMJV is to raise capital and set aside S$2.8 million to discharge these debts.
The 0.5 cent issue price is subject to adjustments if there is a share consolidation that may be required to comply with listing rules.
The non-binding term sheet with the seller MMIH will automatically terminate if no definitive agreements are executed by Oct 31.
An independent and qualified valuer will issue a valuation report on MMJV, excluding any convertible or exchangeable debentures that will be discharged at the deal's completion.
Singapore-incorporated MMJV, its subsidiaries and associated companies hold controlling interests in three gold and copper mining concessions in the Philippines. Singapore-incorporated MMIH wholly owns MMJV.
A week ago, AsiaPhos said it was weighing a restructuring exercise to restore its financial position, after its mining operations in China were interrupted.
The city government had given a directive to vacate and rehabilitate two of the mines, in addition to the national government imposing a stoppage of mining operations at one mine and the non-renewal of that mine's licences.
While AsiaPhos' management is in talks with the government on compensation proposals and has requested arbitration, the board expects that any outcome may take years and require substantial funding.
In connection with the proposed acquisition, AsiaPhos is also proposing a share consolidation, an issue of bonus warrants, the sale of its factory in China and a whitewash waiver.
It intends to get Norwest to issue bonus warrants to existing AsiaPhos shareholders on a pro rata basis, before or concurrently with the reverse takeover's completion, as a way to dispose of the unit.
If and when the AsiaPhos shareholders convert all these warrants in full, they will own at least 99 per cent of Norwest's enlarged share capital.
As Norwest will lead the discussions and arbitration for the mining interruptions, this warrant issue will allow AsiaPhos shareholders to "participate in the rewards and risks" associated with those discussions and arbitration even after the reverse takeover and the disposal of Norwest, said AsiaPhos. It plans to seek shareholders' and other regulatory approvals for the proposed warrant issue.
The long-stop date for completion of the proposed acquisition of MMJV is one year from the date of the definitive agreements.
Catalist-listed AsiaPhos closed 0.1 cent or 5 per cent higher at 2.1 cents on Friday, after the announcement.
