Highlands Pacific Limited has entered into a Scheme Implementation Agreement (SIA) with Cobalt 27 Capital Corp, under which, Cobalt 27 has agreed to acquire all of the shares in Highlands which it does not already own by way of a Scheme of Arrangement (Scheme) under the PNG Companies Act.Cobalt 27 is currently the largest holder of Highlands shares, holding an interest of approximately
13 per cent.
Under the terms of the Scheme, Highlands shareholders will be entitled to receive A10.5 cents cash per share, subject to all applicable conditions being satisfied or waived and the Scheme being implemented.
The consideration represents a premium of 43.8 per cent over the closing price of Highlands shares on 24 December 2018 of A7.3 cents and implies an equity value for Highlands of approximately A$115 million.
The consideration will increase by A1.0 cents cash per share to A11.5 cents if before 31 December 2019 the closing spot price of nickel exceeds US$13,220 per tonne over a period of 5 consecutive trading days.
The Scheme will require the approval of 75 per cent of Highlands’ shareholders entitled to vote and voting at a shareholder meeting which is expected to be held in mid to late April 2019. The Scheme also will require approval by the PNG National Court.
Highlands’ largest shareholders, collectively representing 30.1 per cent of Highlands shares, have stated their intention to vote in favour of the Scheme in the absence of a superior proposal.
These shareholders comprise: Lim Advisors Ltd (owning 9.4 per cent of Highlands), Tribeca Investment Partners Pty Ltd (owning 8.9 per cent) and PanAust Limited (owning 11.8 per cent).
PanAust’s intention to vote in favour of the Scheme, in the absence of a superior proposal, is subject to board and regulatory approval in China. PanAust is a subsidiary of Guangdong Rising Assets Management Co (GRAM), a Chinese state-owned enterprise.
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