Denver-based Resource Capital Fund has succeeded in its $205 million bid for the tantalum and lithium assets of failed miner Sons of Gwalia Ltd after a casting vote by the administrator quashed a rival bid from a consortium backed by former New York mayor
Denver-based Resource Capital Fund has succeeded in its $205 million bid for the tantalum and lithium assets of miner Sons of Gwalia Ltd after a casting vote by the administrator quashed a rival bid from a consortium backed by former New York mayor Rudy Giuliani's law firm.
Mr Giuliani's law firm Bracewell & Giuliani sweetened its offer for the assets in the hope of securing the support of smaller creditors, many of them shareholders in the failed WA miner and was in discussions with shareholder-creditors last night trying to gain enough support.
More than 5,000 Sons of Gwalia shareholders were able to play a big role in determinig the fate of the company's assets after the High Court earlier this year ruled that their claims rank equally with debts owed to credtiors, in effect making the shareholders creditors.
The Bracewell proposal had the support of a small group of large creditors but RCF's proposal had numerical support, with 88.4 per cent of votes cast in favour of RCF's cash offer.
But because the vote was split -creditors owed the most amount of money backed Bracewell but the majority of creditors backed RCF - the casting vote was decided by Garry Trevor, partner at administrator Ferrier Hodgson.
The media were not allowed into the creditors meeting and in a statement this afternoon Mr Trevor's colleague Andrew Love said the decision to award the assets to RCF provided creditors with "the greatest degree of certainty".
"In exercising his casting vote, the meeting chairman took into account those things that were relevant to the creditor group as a whole," the statement said.
RCF's proposal gives creditors owed more than $50,000 a return of 12 cents for every dollar but smaller creditors who are owed $50,000 or less will get 20 cents for every dollar owed.
Under a purchase of sale agreement struck between RCF and the administrator last month, if creditors did not approve the sale or a competing proposal was accepted on or before December 9 break fees of up to $3.5 million may have been payable.
IMF (Australia) Ltd executive director Hugh McLernon acted on behalf of 500 shareholders and said the RCF deal offered certainty for shareholders.
"It's primarily one that's clearly available to shareholders straight away," Mr McLernon said. "It is cash. It is certainty."
Bracewell's conditional debt-for-equity proposal offered creditors owed less than $50,000 the option to take shares in a new company housing the tantalum and lithium assets or take a cash payment of 20 cents for every dollar owed. It earlier offered of 15 cents for every dollar.
Today's creditors meeting came nearly three years after Sons of Gwalia went into administration.
The fight for Sons of Gwalia's advanced minerals division came down to the wire with Bracewall in discussions with at least one large shareholder last night.
Dennis & Co Solicitors principal Bruce Dennis, who acted on behalf of 630 shareholders, took instruction from one large shareholder after the meeting had started.
He said the larger creditors he represented were in favour of taking shares in a new company set up by Bracewell but smaller creditors wanted to be paid out.
"When you look at it from the point of view of a creditor who is perhaps getting back $2,000 or $3,000 they will have such a small, minority interest of shares in a new company that they would want the cash option," Mr Dennis said. "They want something certain and the sooner the better. The RCF deal seems to be sooner."
RCF has a history of taking on troubled assets. It took a 22.6 per cent stake in struggling gold miner St Barbara Mines Ltd and was behind a boardroom reshuffle that resulted in former executive chairman Stephen Miller being voted off the board about three years ago.
