Bidder's Statement
PRESS RELEASE
15 OCTOBER 2015
BIDDER'S STATEMENT
Further to the Metals X Limited's (Metals X or the Company's) announcement earlier today, and in accordance with Item 5 of section 633(1) of the Corporations Act, attached is the Bidder's Statement dated 15 October 2015 with respect to an off-market takeover offer by Metals X for all of the shares in Aditya Birla Minerals Limited.
The Bidder's Statement was lodged with ASIC and served on Aditya Birla today.
The Company also advises ASX that it has set the 'Register Date' as Friday, 16 October 2015, pursuant to section 633(2) of the Corporations Act.
ADVISORS
Metals X is advised by -
Corporate Advisors: Xavier Group
Legal Advisor: HopgoodGamin
ASX Code: MLX
OTCQX Code: MLXEF
Level 3, 18-32 Parliament Place West Perth WA 6005
Australia
[email protected] www.metalsx.com.au
BIDDER'S STATEMENT
Issued by
ACN 110 150 055
to acquire all of your fully paid shares in
ADITYA BIRLA MINERALS LIMITED ACN 103 515 037
THE OFFER IS 1 METALS X SHARE
FOR EVERY 5 OF YOUR ADITYA BIRLA SHARES.
ACCEPT THE OFFER
Corporate Advisor Legal Advisor
This document contains important information and requires your immediate attention. If you have any questions about the Offer or this document or about how to accept the Offer you should consult your legal, financial or other professional adviser immediately or please call the Metals X information line on 1300 659 000 (for callers within Australia) or +61 8 9215 6061 (for callers outside Australia).
This Offer is dated [30 October 2015] and will close on [30 November 2015], unless extended.
Important Dates
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Announcement Date:
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15 October 2015
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Bidder's Statement and Lodgement Date:
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15 October 2015
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Date of Offer:
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[30 October 2015]
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Offer period ends:
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5.00pm (AWST) on [30 November 2015]
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Corporate Directory
Registered Office
Level 3, 18 - 32 Parliament Place West Perth WA 6005
Phone: +61 8 9220 5700
Fax: +61 8 9220 5757
Email: [email protected] Web: www.metalsx.com.au
Postal Address
PO Box 1959
West Perth WA 6872
Securities Exchange
Listed on the Australian Securities Exchange
ASX Code: MLX OTCQX Code: MLXEF
Share Registry
Security Transfer Registrars Pty Ltd 770 Canning Highway
Applecross WA 6153
Phone: 61-8-9315 2333
Fax: 61-8-9315 2233
E-mail: [email protected]
Important Notices
Bidder's Statement
This document is the Bidder's Statement dated 15 October 2015 given by Metals X Limited (Metals X) to Aditya Birla Minerals Limited (Aditya Birla) under Part 6.5 of Chapter 6 of the Corporations Act and in compliance with the requirements of Sections 636 and 637 of the Corporations Act, in relation to the Offer. Section 9 of this Bidder's Statement contains the formal terms of Metals X's Offer and other information relevant to your decision whether to accept the Offer.
Australian Securities and Investments Commission
A copy of this Bidder's Statement was lodged with the Australian Securities and Investments Commission (ASIC) on 15 October 2015. Neither ASIC nor any of its officers takes any responsibility for the content of this Bidder's Statement.
Date of the Offer
This Bidder's Statement is dated 15 October 2015. It includes an Offer dated [30 October 2015] (the Offer Date) in Section 9 of this document.
Investment Advice
This Bidder's Statement does not take into account the individual investment objectives, financial situation and particular needs of each Aditya Birla Shareholder. Metals X recommends you seek independent financial and taxation advice before making a decision as to whether or not to accept the Offer for your Aditya Birla Shares. You should read this Bidder's Statement in its entirety.
How to Accept
The manner by which you accept the Offer will depend on the nature and type of your holding in Aditya Birla. Full details of how to accept the Offer are set out in Section 9 and a summary is set out in Section 4 of this Bidder's Statement. Acceptances must be received by the end of the Offer Period.
Privacy
Metals X has obtained your information from the register of Aditya Birla Shareholders for the purpose of making the Offer and, if accepted, will administer your holding of Metals X Shares. The Corporations Act requires the names and addresses of Metals X Shareholders to be held in a public register. Your information may be disclosed to Metals X's related bodies corporate and external service providers. It may also be required to be disclosed to regulators such as ASIC.
Defined Terms
Terms used in this Bidder's Statement and Offer are defined in Section 13 below.
Forward Looking Statements
This Bidder's Statement includes certain forward looking statements. If such statements relate to future matters, they are subject to inherent risks and uncertainties. These risks and uncertainties include factors and risks specific to the industry in which Metals X operates as well as matters such as general economic conditions, many of which are outside the control of Metals X and its Directors. These factors may cause the actual results, performance or achievements of Metals X if the Offer is successful to differ, perhaps materially, from the results, performance or achievements expressed or implied by those forward looking statements. The past performance of Metals X or Aditya Birla is not a guarantee of future performance.
Responsibility for information
Except as outlined below or otherwise stated in the Bidder's Statement, the information contained in the Bidder's Statement has been prepared by Metals X and is the responsibility of Metals X.
HopgoodGanim Lawyers prepared and is responsible for the taxation summary in Section 11 of this Bidder's Statement.
Disclaimer as to Aditya Birla and Merged Group Information
Information in this document about Aditya Birla has been prepared based on publicly available information and limited due diligence has been conducted by Metals X to confirm this publicly available information. Metals X has not verified all publicly available information. Accordingly, subject to the Corporations Act, Metals X does not make any representation or give any express or implied warranty as to the accuracy or completeness of such information.
The information on the Merged Group contained in this Bidder's Statement, to the extent that it incorporates or reflects information on Aditya Birla, has also been prepared using publicly available information. Accordingly, information in relation to the Merged Group is subject to the foregoing disclaimer to that extent.
Further information relating to Aditya Birla's business may be included in the Target's Statement that Aditya Birla must provide to its shareholders in response to this Bidder's Statement.
Aditya Birla security holders outside Australia
This Bidder's Statement and the Offers do not constitute an offer of securities in any jurisdiction in which it would be unlawful.
The distribution of this Bidder's Statement may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this Bidder's Statement should inform themselves of, and observe, those restrictions particularly those below.
India
This Bidder's Statement is neither a document offering shares to the public nor a prospectus under the Companies Act, 2013 (India), as amended or an advertisement, and should not be circulated to any person other than to whom the Offer is made. This Bidder's Statement has not been and will not be registered as a prospectus with the Registrar of Companies in India. This Bidder's Statement shall not be issued, circulated or distributed, directly or indirectly, in India. Further, the Metals X Shares may not be offered, directly or indirectly, in India, to, or for the account or benefit of, any resident of India except as permitted by applicable Indian laws and regulations, under which an offer is being made strictly on a private and confidential basis and is limited to existing shareholders of Aditya Birla and is not an offer to the public in India. This issue is a private placement in India and the Bidder's Statement is not intended to be circulated to more than 200 existing shareholders of Aditya Birla in India on an aggregate basis (including all other private placements of Metals X Shares made in this financial year; a financial year being the 12 month period commencing on April 1 and ending on March 31 of the following year) and each copy of this Bidder's Statement is individually and serially numbered. It does not constitute and shall not be deemed to constitute an offer or an invitation to subscribe to the aforesaid securities to the public in general.
This Bidder's Statement has been prepared solely to provide general information about Metals X to identified and eligible Aditya Birla shareholders investors to whom it is addressed and who are willing and eligible to subscribe to the aforesaid securities. This Bidder's Statement does not purport to contain all the information that any eligible Aditya Birla shareholder investor may require. Further, this Bidder's Statement has been prepared for informational purposes relating to this transaction only and upon the express understanding that it will be used only for the purposes set forth herein.
Apart from this Bidder's Statement, no offer document or prospectus has been prepared in connection with this offer or in relation to Metals X nor is such offer document or prospectus required to be registered under applicable laws or regulations in India. Accordingly, this Bidder's Statement has neither been delivered for registration nor is it intended to be registered with any authority in India. Metals X accepts no responsibility for statements made other than in this Bidder's Statement or any other material expressly stated to be issued by or at the instance of Metals X in connection with the issue of the said securities and that anyone placing reliance on any other source of information would be doing so at their own risk.
This Bidder's Statement and the contents hereof are restricted only for the intended recipient(s) who have been addressed directly and specifically through a communication by Metals X and only such recipients are eligible to apply for the aforesaid securities. All investors are required to comply with the relevant regulations/guidelines applicable to them for investing in this offer. The contents of this Bidder's Statement are intended to be used only by those investors to whom it is distributed. It is not intended for distribution to any other person and should not be reproduced by the recipient.
No invitation is being made to any persons other than those to whom application forms along with this Bidder's Statement being issued have been sent. Any application by a person to whom the Bidder's Statement has not been sent by Metals X shall be rejected without assigning any reason.
This Bidder's Statement does not constitute, nor may it be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. No action is being taken to permit an offering of the aforesaid securities or the distribution of this Bidder's Statement in any jurisdiction where such action is required. Persons into whose possession this Bidder's Statement comes are required to inform themselves about and to observe any such restrictions. The Bidder's Statement is made available to investors in India on the strict understanding that it is confidential.
Why you should ACCEPT the Metals X Offer
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1 You will receive an attractive 60.6% premium to the prevailing market price1whilst still retaining exposure to future share price upside.
You will receive 1 Metals X Share for every 5 Aditya Birla Shares held, thereby maintaining an exposure to the Aditya Birla assets.
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2 You will become a shareholder in a leading Australian diversified mining group.
Metals X is a diversified mining group offering exposure to gold and base metals, predominately gold, tin, nickel and upon the successful conclusion of this Offer, copper.
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3 You will become a shareholder in a company with a strong mining team with expertise relevant to addressing Nifty's issues.
Metals X has a Board and management team with many years of combined mine development and operating experience, and in particular has many years of hands on experience managing underground mines like Nifty.
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4 Metals X has a track-record of successfully acquiring and improving mines.
Metals X has made multiple significant acquisitions in the past 3 years and has proved itself a successful manager of those operations, applying mining expertise and financial and operating discipline to produce strong financial results.
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5 The Offer greatly reduces the risks associated with being an Aditya Birla Shareholder.
You will become a shareholder in a multi commodity and multi mine company with a strong growth profile, rather than a shareholder in a company with a single operating mine, Nifty, that Aditya Birla management has publicly stated that based on its LOM Plan, Nifty has only 5 years mine life remaining.
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6 Potential for receipt of dividend payments.
Aditya Birla Shareholders who accept the Offer and hold Metals X Shares at any future dividend record date would be eligible to receive any associated future dividends paid by Metals X. Metals X's current dividend policy is to pay 30% of NPAT (net profit after tax) and has done so for the past 2 years.
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7 Metals X's Offer provides opportunity for an immediate outcome.
The Aditya Birla Board has announced the appointment of an advisor with the intention of running an as yet undefined process to consider the sale of your company or its assets. Your Board took almost 2½ years to transact a sale of Mt Gordon. Metals X is offering you a quick and certain opportunity to trade out of your underperforming Aditya Birla Shares and into Metals X shares, should our Conditions be satisfied.
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8 Your Metals X Shares will trade in a far more liquid market than your Aditya Birla Shares.
The liquidity in the market place for Metals X Shares is far greater than that of Aditya Birla, giving you a much improved ability to trade the shares you own.
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For more information on the reasons why you should accept the Metals X Offer, please refer to Section 3.
For information on the risk factors associated with Metals X, please refer to Section 10. For information on how to accept the Metals X Offer, please refer to Sections 1 and 9.5.
1 Based on Metals X Shares closing price on the day prior to the Announcement Date, compared to Aditya Birla's closing price on the day prior to the Announcement Date.
TABLE OF CONTENTS
SECTION 1 SUMMARY OF THE OFFER 6
SECTION 2 LETTER FROM THE CHAIRMAN 8
SECTION 3 REASONS TO ACCEPT METALS X'S OFFER 11
SECTION 4 FREQUENTLY ASKED QUESTIONS 15
SECTION 5 INFORMATION ON METALS X 19
SECTION 6 INFORMATION ON ADITYA BIRLA 39
SECTION 7 INFORMATION ON THE MERGED GROUP 46
SECTION 8 THE INTENTIONS OF METALS X 51
SECTION 9 TERMS AND CONDITIONS OF THE OFFER 55
SECTION 10 RISK FACTORS 70
SECTION 11 TAX CONSIDERATIONS 75
SECTION 12 ADDITIONAL INFORMATION 79
SECTION 13 DEFINITIONS AND INTERPRETATION 87
SECTION 14 APPROVAL OF BIDDER'S STATEMENT 91
SECTION 1 SUMMARY OF THE OFFER
This summary of the Offer provides a general overview only and should be read together with the detailed information set out in the remainder of this Bidder's Statement.
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The Offer
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Metals X is offering to acquire ALL of the ordinary shares in Aditya Birla.
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Implied Offer Value
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Metals X is offering 1 Metals X Share for every 5 ordinary shares in Aditya Birla. The implied Offer value is equivalent to, approximately:
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$0.274 per Aditya Birla Share, based on Metals X Shares closing price on the day prior to the announcement of the Offer, compared to Aditya Birla's closing price on the day prior to the announcement of the Offer of $0.17. A premium of 60.6%.
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$0.247 per Aditya Birla Share, based on a 1-month VWAP of Metals X Shares as at 14 October 2015, the day prior to the announcement of the Offer, compared to Aditya Birla's 1-month VWAP in that same period of $0.168. A premium of 46.9%.
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$0.240 per Aditya Birla share, based on a 2-month VWAP of Metals X Shares as at 14 October 2015, the day prior to the announcement of the Offer, compared to Aditya Birla's 2-month VWAP in that same period of $0.170. A premium of 41.6%.
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$0.237 per Aditya Birla share, based on a 3-month VWAP of Metals X Shares as at 14 October 2015, the day prior to the announcement of the Offer, compared to Aditya Birla's 3-month VWAP in that same period of $0.199. A premium of 19.0%.
As Metals X Shares are listed on the ASX, the market price of Metals X Shares can fall as well as rise and may be subject to varied and unpredictable influences. Accordingly there is no guarantee that the Metals X Shares offered will continue to be equivalent to or above
$0.274.
See Section 10 for an explanation of risk factors associated with this Offer and becoming a Metals X shareholder.
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Key Dates
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Announcement Date of Offer ............................................................................ 15 October 2015
Bidder's Statement date and lodged with ASIC................................................ 15 October 2015 Date of Offer ................................................................................................... [30 October 2015]
Earliest date for close of Offer
(unless extended or withdrawn).................................................................. [30 November 2015]
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Issue of Metals X Shares
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Subject to the terms of the Offer in Section 9, you will be issued your Metals X Shares, following acceptance of the Offer by you (unless you are a Foreign Shareholder or Unmarketable Parcel Shareholder), by the end of whichever of the following periods ends earlier:
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one (1) month after the later of your acceptance and the date the Offer becomes unconditional; or
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twenty-one (21) days after the end of the Offer Period.
Full details of when Metals X Shares will be issued are set out in Section 9 including details of consideration to be paid to Foreign Shareholders or Unmarketable Parcel Shareholders at Section 9.10 (being sale proceeds from Metals X Shares they would otherwise receive).
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Conditions
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The Offer is subject to a number of conditions that are set out in full in Section 9 of this
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of the Offer
How to accept the Offer
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Bidder's Statement.
You may only accept the Offer in respect of all (not part) of your Aditya Birla Shares. To accept the Offer:
Issuer sponsored shareholders
If your Aditya Birla Shares are Issuer Sponsored Holdings on Aditya Birla's issuer sponsored sub register, you must complete, sign and return the enclosed Acceptance Form in accordance with the instructions so that it is received before the end of the Offer Period. A reply paid envelope has been enclosed for shareholders with Australian addresses to return their completed Acceptance Form.
CHESS sponsored shareholders
If your Aditya Birla Shares are held in a CHESS Holding, ensure your acceptance is received before the end of the Offer period by either:
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instructing your Controlling participant (normally your stockbroker) to initiate acceptance of the Offer on your behalf; or
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completing, signing and returning the enclosed Acceptance Form in accordance with the instructions.
Participants
If you are a Participant, acceptance of this Offer must be initiated in accordance with the ASX Settlement Operating Rules before the end of the Offer period.
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Enquiries about the Offer
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Metals X has established a shareholder information hotline in relation to the Offer. If you have any questions about the Offer or how to accept the Offer, please call* the shareholder information hotline on:
1300 659 000 (for callers within Australia)
+61 8 9215 6061 (for callers outside Australia)
OR consult your broker, legal or other financial or professional adviser.
The shareholder information hotline is open from 9.00 am to 5.00 pm AWST from Monday to Friday during the Offer Period. *Calls may be recorded.
For questions regarding your holding of shares in Aditya Birla, please call Aditya Birla's share registry Link Market Services Limited on +61 8 9211 6650.
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SECTION 2 LETTER FROM THE CHAIRMAN
Dear Aditya Birla Shareholder,
Offer for Aditya Birla Shares
On behalf of the Metals X Board, I am pleased to present you with this Offer to acquire all of your Aditya Birla Shares at the ratio of 1 Metals X Share for every 5 Aditya Birla Shares you own. 1 Given Metals X share price of $1.365 on the day prior to announcement of the Offer and your Aditya Birla share price on
the same day of $0.17, this implies an offer premium of 60.6% to the market value of your shares on that day2. Based on the 1-month, 2-month and 3-month volume weighted average prices of both Metals X and
Aditya Birla shares up to the day prior to announcement, the premium offered for your shares is 46.9%, 41.6% and 19.0% respectively3.
If all of the bid Conditions are met and we are successful in acquiring ownership of your company, we will welcome you as new shareholders to what we believe is one of Australia's premier mid-tier diversified mining companies - Metals X.
The Metals X Offer is subject to conditions as set out in Section 9, including a minimum acceptance condition of 90%. This means that Aditya Birla's largest shareholder, Hindalco, must accept to enable it to take effect and enable all other shareholders to participate.
Metals X offers an attractive opportunity to exchange your current shareholder risk profile from a single mine, single commodity company to a shareholding in a balanced portfolio of commodity exposure in both gold and base metals across multiple operating mines and many development projects. On acquiring Aditya Birla the base metals side of the Metals X portfolio will expand with the addition of a copper division. In our view, this expanded commodity diversity provides significant advantages and stability in these uncertain times in the mining and commodity markets. The market has endorsed the Metals X strategy by rewarding us with strong share price performance over the past few years. This is in stark contrast to the performance of your Aditya Birla Shares which have fallen considerably.
And importantly, across our portfolio of projects and commodities, Metals X also offers a growth profile that your company does not have, as is evidenced by the contraction of Aditya Birla's operations, including the recent announced sale of Mt Gordon, the down-grading of Mineral Resource and Ore Reserve statements at Nifty and the culling of exploration and mine development budgets.
The Board of Aditya Birla has acknowledged the lack of growth options open to your company and earlier this year your Board announced its intention to conduct a review of your company's strategic options, including the Board's intention to review ownership options available to your company4. Only recently, the
Aditya Birla Board has announced the appointment of a financial advisor potentially to dispose of all its assets.
Metals X formally wrote to the Aditya Birla Board on 13 May 2015 proposing that our companies enter into merger discussions. On 5 June your CEO replied to Metals X advising that your company was in the process of appointing a corporate advisor and that once that advisor was appointed the company would be in contact with us to discuss our proposal. To date, however, we have had no further response from your company to our invitation for merger discussions and we have not been contacted by Aditya Birla's corporate advisors to discuss (let alone advance) the proposal we made nearly 6 months earlier. The announcement made by your company, on 8 October 2015 provides that it has only now appointed a financial advisor.
1 Unless you are a Foreign Shareholder or Unmarketable Parcel Shareholder - refer Section 9.10 for details.
2 Metals X closing price of $1.36 and Aditya Birla closing price of $0.17 on 14 October 2014.
3 VWAPs from 15 September to 14 October 2015, 17 August to 14 October 2015 and 16 July to 14 October 2015 sourced from IRESS.
4 Metals X current policy is to pay 30% of NPAT as dividends.
Your company has been through a very difficult time over the past three years with shareholder wealth significantly destroyed by a plethora of serious issues and management decisions at its operations, including:
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The Mt Gordon operations being placed on care and maintenance in April 2013.
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A large number of statutory and environmental breaches at Mt Gordon.
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A catastrophic underground mine failure occurred at Nifty in March 2014, resulting in a prohibition notice being issued against the company by the DMP.
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A large negative re-statement of Mineral Resource and Ore Reserve estimations for Nifty.
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The curtailment of mine capital development and the cutting of exploration budgets which has the potential to strangle the future production potential and mine life of the project.
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The Nifty workforce being significantly reduced and suffering high turnover, symptomatic of both a disgruntled workforce and a reduced capacity to maximise project outputs.
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Your Board recognised an impairment of $219,022,000 in the value of your company's assets in the year ending March 2015 Aditya Birla accounts.
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In recent weeks, the company has announced the sale of the Mt Gordon mine at a significantly reduced price to its purchase and book value, which will undoubtedly result in further necessary impairments.
This is definitely not what you should expect to be achieved from an efficient and well run mining company.
A key consideration in accepting this Offer by you as a shareholder of Aditya Birla should be to put a stop to the potential further erosion of the Nifty resources through poor mining practices, lack of investment in development and exploration and the resultant destruction of your shareholder value in Aditya Birla.
Nifty continues to be a challenging operation. However, we believe Metals X with our underground mining experience, technical capability and financial capacity is almost uniquely placed to take on the Nifty challenge.
We have a strong mining pedigree and we pride ourselves on our financial and operating discipline. Our Board and management team has many years of combined experience planning and managing underground mining operations, like Nifty. We currently operate numerous underground and open-pit mines and have a sound track-record in mining project turn-arounds and exploration success.
We have the necessary experience to merge and integrate separate operations, like Nifty, into a cohesive operating environment. Metals X has made numerous mine and project acquisitions in the past 3 years, and we have proven ourselves a successful manager of those operations, applying our mining expertise and financial and operating discipline to produce strong financial results. Further, all of this has been achieved using internally generated funds or the issue of consideration shares, without the need to go to the market to raise additional cash.
For the 2014/2015 financial year, Metals X achieved a 15% increase in EBITDA to $82.6 million on a 32% increase in revenue to $315.2 million, realising a return on equity of 12%.
In addition, we are currently planning for future growth and the opportunities for Metals X are exciting.
We are in the process of commissioning our Central Murchison Gold Project to be our newest gold production centre. We will complete the acquisition of the Grosvenor Gold Project shortly and are aiming to bring it into production in 2016. We are integrating the newly acquired Mt Henry Gold Project into our Higginsville Gold Operations adding many years of potential mine life to that operation.
Accordingly, we believe that by exchanging your shares in Aditya Birla for Metals X Shares under the Offer, in addition to receiving the implied premium for your Aditya Birla Shares, you will become a shareholder in a stronger, more diversified mining company with attractive growth prospects.
Also if we can succeed in turning around the fortunes of Nifty, as a Metals X Shareholder, you will retain exposure to the upside value we can create.
We believe this is an attractive Offer and encourage you to accept without delay. You cannot afford to have your shares further devalued by the way the Aditya Birla Board and management have operated your company's assets.
There are many opportunities for Metals X to deploy its capital and expertise and whilst we have chosen to make you this generous Offer to become part of the Metals X Group, we may not persist with this Offer in denial of other good opportunities. Hence, we encourage you to accept without delay and give Metals X the chance to stabilise and enhance the value of your investment.
If you have any questions about the Offer, please contact your broker or financial adviser, or call the shareholder information line on 1300 659 000 (for callers within Australia) or +61 8 9215 6061 (for callers outside Australia).
Sincerely,
Peter Newton Chairman