Herald Resources (HER) Accepts Bid from Antam-Zhongjin

Submitted by Craig Strzelecki on 4 June, 2008 - 11:24

Directors of Herald Resources (HER)has finally given thumbs up to the joint venture offer from Indonesian mining company Pt. Antam and Chinese smelter Zhongjin. They shall sell their shares to the joint venture offer from the two companies. The Chinese and Indonesian consortium had offered $2.60 cash and $2.65 a share offer which valued Herald Resources at $524 million.

This offer exceeds the $504.14 million bid from Indonesian coal miner Pt. Bumi. If the consortium gets 50.1 percent stake, it shall offer $2.60 per share and if it gets 90 percent control of the company, it shall up the offer by $2.65 a share. This means that bid value of 100 percent equity of Herald Resources would be A$514 million at lower price and $524 million at higher price. Moreover, directors or Herald Resources have also agreed to sell their own shares which represent 8.27 percent of the company.

The Chinese and Indonesian consortium shall enter the bid through its investment vehicle, Tango Mining. This special purpose vehicle is being advised by Macquarie Capital Advisers and Blake Dawson. Antam owns 40 percent stake in Tango while Zhongjin owns the other 60 percent. The board had already rejected the bid from Pt. Bumi which had proposed a bid of A$2.55 a share through its investment vehicle, Calipso Investment.

According to Herald Resources’ Executive Director, Michael Wright, the company had been in discussion with both the parties since a long time without any party getting any traction. Now the board has recommended Antam-Zhongjin bid as higher and would wait for higher bid from Bumi. Tango has reserved its right to revise its bid and its offer valid till June 19. On the other hand, Bumi had revised its bid on May 26 and its offer expired on June 04. Tango’s recent bid is 2 percent higher than Bumi’s last bid.

The offer from Antam-Zhonjin consortium is already pitched at 90 percent premium to the price at which shares of Herald Resources have been traded in the stock market since past three months. Share prices of Herald Resources continue to spiral upwards as investors do not take the bidding war to be final as yet. Herald shares prices closed at A$2.78 which was one percent lower.