Alto Metals Ltd’s (ASX:AME) board has maintained its recommendation not to accept the takeover offer from Habrok (Alto) Pty Ltd despite an increase to 7 cents per share from 6.6 cents.
In support of this recommendation, the majority of the company’s key shareholders, holding 51.45% of shares on issue, have confirmed their intention not to accept the offer.
The increased Habrok offer was made on the proviso that Alto not proceed with an entitlement offer announced on July 13, 2020, at 7 cents per share aimed at raising $5.1 million.
Conditional offer increase assessed
With a total of $2.6 million in subscriptions and commitments already secured, the directors have assessed the conditional offer price increase and maintain the view that the entitlement offer is in the best interests of shareholders as a whole.
As such, they have determined that they do not intend to terminate the entitlement offer for which Morgan’s Corporate is acting as lead manager.
Endorsement of project
Alto’s directors believe that the strong subscription response and confirmation of the majority of key shareholders is a strong endorsement of the potential of the Sandstone Gold Project and support to ongoing drilling and exploration activities.
The company said: “Alto is pleased to announce that it has received updated statements from the majority of its key shareholders holding 51.45% of the Alto shares on issue confirming:
- Their intention to subscribe for their full entitlement under the entitlement offer, representing [$2.6 million] in total; and
- That they would not accept a takeover offer from Habrok of $0.07 per share.
“While the Habrok takeover offer for Alto's shares is unconditional and therefore not dependent upon a minimum level of acceptances from Alto shareholders, Alto considers that the statement of continued support from these shareholders is a strong endorsement of Alto's exploration strategy and the potential of the Sandstone Gold Project.”
Response to Habrok commentary
In a statement, Alto said: “Habrok’s announcement of July 17, 2020, stated that an offer price of $0.07 per share will represent a 7.69% premium to the offer price under the takeover bid by Goldsea Australia Mining Pty Ltd of $0.065 per share, which the Alto board of directors recommended Alto shareholders accept on May 1, 2020.
“Alto does not consider the first Goldsea offer price, or Alto’s share price prior to the Goldea offer, to be a reasonable basis of comparison. Since May 1, 2020, there have been several key developments, including:
- The subsequent revision of Goldsea's offer price to $0.075 per share (which offer lapsed as a result of ongoing delays with FIRB);
- Alto's recent share price trading has been at a sustained premium to the proposed revised offer price, including Alto's closing share price on July 16, 2020 at $0.072;
- Alto's announcement of an update to the mineral resource estimate for the Sandstone Gold Project; and
- The sustained positive share price performance of ASX-listed gold companies since May 1, 2020.
“You will shortly receive a Bidder's Statement from Habrok in relation to its offers. To reject the offers, you should take no action.
“Alto will respond to the Bidder's Statement with a Target's Statement in due course, which will contain your directors’ formal recommendations, along with a balancing of risks associated with retaining shares versus participating in the Habrok takeover offers.”