Shares in mining services provider Bradken soared 13 per cent yesterday as the company confirmed it had received an offer from CHAMP private equity for as much as 49.9 per cent of the business.
Despite last month’s proposal by CHAMP being rejected by the company on Tuesday, shares in Bradken gained 9.5c to 81.5c on the news. As first flagged in The Australian yesterday, CHAMP has proposed to buy between 49 and 49.9 per cent of the business.
The move comes as Bradken delivers on hopes of improved performance this year. It is now well capitalised.
Previously, the company had said that it wanted to put the past two years — during which it received takeover bids as high as $6 per share from various parties — behind it and concentrate on improving the business.
In a statement released to the Australian Securities Exchange yesterday, Bradken said on March 14 it received an unsolicited, indicative recapitalisation proposal from funds managed by CHAMP Private Equity.
The offer would involve the subscription of new equity to the amount of $150 million, through two separate share placements.
This would be via an un¬conditional placement equal to the maximum number of shares available under the company’s placement capacity at 75c per share.
Bradken said at the date of the proposal CHAMP owned about 3.1 per cent of the company, and combined with the new subscription of equity under the proposal, it would have resulted in CHAMP’s shareholding in Bradken increasing to between 49 and 49.9 per cent.
The proposal, which was not conditional on due diligence, also included conditions such as Bradken committing to exclusive negotiations with CHAMP, that a new independent chairman being appointed and that CHAMP have the right to nominate new board members, representative of its shareholders.
Another condition specified a $1.5m break fee to be paid to CHAMP in the event that a ¬superior proposal is accepted by the company or a director withdraws their recommendation.
However, the company said that after considering the offer it had determined that it was not in the best interests of its shareholders. Bradken said that the offer provided CHAMP with a blocking stake, reducing the chances of a rival proposal, and would have offered the buyout firm a strategic shareholding in the company at an overall price that the board did not believe reflected fair value.
“The directors remain confident in the leadership of new chief, Paul Zuckerman, and his ... team to implement strategies necessary to maximise value for Bradken’s shareholders through the cycle,” the company said.