RE: RE: RE: More Info Kumvest gets set for hostile takeover
Kumvest, a holding company owned by local businessman Mandla "Bear" Kumalo, has made the first move towards a hostile takeover of troubled miner First Uranium Corporation.
Image: Reuters
A haul truck is seen carrying uranium ore out of Energy Resource Australia"s Ranger uranium mine in Australia"s Northern Territory
" The target is First Uranium Corporation, with an offer of $20m
First Uranium announced in March that it intended to wind itself up by selling off its assets. Kumvest will make an appeal to shareholders at a scheduled meeting on Wednesday to acquire 26% and put a new management team in place in the hopes of turning the company around.
First Uranium, which has its primary listing in Toronto but its operations in South Africa, is to hold a shareholders' meeting on Wednesday to approve the sale of its two primary assets - gold and uranium tailings recovery facility Mine Waste Solutions (MWS) to AngloGold Ashanti and its Ezulwini gold mine in Westonaria, Gauteng, to Gold One International - although it said in a subsequent statement the board would consider other offers to shareholders before the meeting.
In a letter addressed to First Uranium's board on Friday, Kumvest - which already has investments in the mining sector - said it believed the current board had failed to realise the full potential of the Ezulwini mine for shareholders, and that while it agreed with the move to sell MWS to settle immediate financial obligations, its intention is to replace the company's executive, chairman and nonexecutive directors in order to provide long-term value for shareholders.
On the face of it, Kumvest's offer faces a number of challenges - not least being a share price which virtually doubled in the last week in expectation of the sale of assets and First Uranium's announcement that it was seeking to raise the final dividend payout to shareholders to $50.2-million from the $36.6-million proposed in March.
This plan, which involves reducing the returns to current debt holders, would need to be approved by the debt holders first.
According to Kumalo, the final amounts for the asset sales would be known only at the time and shareholders could not be sure of the final dividend figure.
Kumvest believes its offer is still at a significant premium to the market price, and comes in at a cumulative value of about $20-million. Kumalo said he had the backing of the two largest current shareholders, who own 20% (48million) of the shares.
According to Kumalo, First Uranium has undervalued the Ezulwini mine. Ezulwini was sold to First Uranium by a joint venture between Simmer & Jack and Waterpan Mining Consortium in 2006.
Kumvest believes there is a significant ore body which could be better exploited.
In its letter to the board, Kumvest said it believed the current board of First Uranium had run the company into financial trouble by failing to exploit the ore body, while also running foul of BEE requirements that could have seen the miner make more headway in the sector - a failing that a takeover by Kumvest could rectify.
Kumvest asked First Uranium's board to inform shareholders of the proposal and put it to a vote at the shareholders' meeting. Kumalo said he hoped the board would do this.