ERA to proceed with Rio Tinto-led capital raise after Takeovers Panel decision
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The news: Energy Resources of Australia (ERA) said it will proceed with its $880 million capital raise "as soon as possible" after the Australian government's Takeovers Panel declined to make a declaration of unacceptable circumstances in relation to the proposed entitlement offer.
The numbers: The uranium producer will look to raise around $880 million in a heavily discounted entitlement offer, first announced in August, which could see its majority shareholder Rio Tinto increase its stake in the company from 86.33% to 99.2%.
The context: The Takeovers Panel said it reached "similar conclusions" to the initial panel and was satisfied that ERA's independent board committee (IBC) had complied with the panel's guidance on rights issues.
The panel noted that "nothing suggested the IBC had failed to undertake an appropriate process" in relation to the proposed equity raise, and accepted IBC's view that the equity raise was the only viable option available in the circumstances.
In September, Zentree Investments and Packer & Co, which hold 3.04% and 8.82% voting power in ERA, respectively, sought interim orders from the Takeovers Panel to delay the capital raise. The shareholders claimed the offer would see Rio's shareholding increase above the compulsory acquisition threshold of 90%, without an applicable exemption under Chapter 6 of the Corporations Act.
The Takeovers Panel subsequently declined the shareholders' request, stating that ERA's independent board committee took appropriate steps to try and mitigate the potential control effect of an equity raise which could see Rio acquire the company.
The sources: ASX announcement, ASX announcement
