Takeovers Panel not second guessing ERA's independent board over capital raise
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More news: The Takeovers Panel believes Energy Resources of Australia’s (ERA’s) independent board committee took appropriate steps to try and mitigate the potential control effect of an equity raise which could see Rio Tinto acquire the company.
The panel said it would not conduct proceedings in relation to ERA after two shareholders sought to delay a capital raise proposed by majority shareholder Rio Tinto.
If there are no other shareholders participating in the capital raise, Rio’s voting power in ERA could increase up to 99.25%.
What they said: “The panel was not minded to second guess the independent board committee’s decision regarding the proposed equity raise, including in relation to ERA’s need for funds, the timing or quantum of this need, the assessment of alternate funding sources and strategies, and the structure of the rights issue,” the panel said.
“The panel concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances.”
Takeovers Panel declines to delay ERA capital raise
The news: The Australian government’s Takeovers Panel has declined a request from two ERA shareholders to delay a proposed share issue, clearing the way for the heavily discounted capital raise.
The numbers: Earlier this month, Zentree Investments and Packer & Co, which hold 3.04% and 8.82% voting power in ERA, had sought interim orders from the Takeovers Panel to delay the $880 million capital raise proposed by majority holder Rio Tinto.
ERA said on Wednesday the government body had declined that request. ERA shares last traded at 0.6 cents and have lost more than half their value since Rio announced the heavily discounted entitlement offer at a price of $0.002 per share in late August.
The context: Zentree and Packer & Co had urged the Takeovers Panel to delay the capital raising saying that ERA and Rio were taking advantage of the ongoing litigation regarding the Jabiluka mineral lease and ERA did not need to raise capital immediately.
ERA's majority shareholder Rio has committed $760 million to the raise, which could see its stake increase from 86.33% to 99.2%. Rio has already provided an intention statement to ERA noting that it would proceed with the compulsory acquisition of all remaining ERA shares if it acquired the shares.
The company finished processing uranium at the mine in 2021 and is due to complete the clean-up of the site by 2028. The Ranger mine, located 230km east of Darwin, has long been controversial because it is surrounded by the world heritage-listed Kakadu National Park and has a history of environmental incidents.
The source: ASX announcement
