One day after rejecting a takeover offer from Orvana Minerals (TSX: T.ORV, Stock Forum), Kinbauri Gold (TSX: V.KNB, Stock Forum) announced late Tuesday that it has signed a definitive subscription agreement with Glen Eagle Resources (TSX: V.GER, Stock Forum) who will invest in the company’s subsidiary.
In a deal originally announced last month, Glen Eagle will invest C$32 million to acquire a 45% interest in Kinbauri Espana S.L, which holds a 100% interest in the El Valle/ Carles gold/copper project in Northwestern Spain.
The subscription agreement also grants Glen Eagle the right to acquire a further 5% interest for an additional $5 million.
In addition to the subscription agreement, Kinbauri Espana and Glen Eagle will enter into a shareholders' agreement where Espana will have a board of directors consisting of five nominees, three to be appointed by Kinbauri and two to be appointed by Glen Eagle.
“The shareholders' agreement also contains a provision for the dilution of a non-participating shareholders' interest and upon either parties' interest being diluted under 10%, it will be converted into a 2.5% net smelter return royalty,” says the company.
The transaction is anticipated to close around May 29.
On Monday, Orvana Mineralsannounced that it intends to make an all-cash offer of 55 cents per share for all outstanding shares of Kinbauri, subject to a condition that Kinbauri not consummate its proposed transaction with Glen Eagle Resources. Kinbauri announced later that day that it was rejecting the offer.
Shares of Kinbauri climbed 3.5% to 59 cents Wednesday.
As part of a larger post on the Kinbauri Gold Bullboard Wednesday, robbie25 said:
I understand there may be people here who feel that KNB is worth $5.50 (at an incredible premium of 1,400% from Friday's close.....funny how the market never picked up on this massive discrepancy), but let's be real.....you can go to almost any board for any stock and find people who honestly believe they know better then the market, and that they know the "truth" that their company is worth way more then the market thinks. But that's wrong.....the market is not always right, but they are never off by THAT much. You can go to ORV's board and find people who think the company is worth $4+....and that's wrong
Now obviously, as an ORV shareholder, I want this deal to go through......but I'm not here to trick anybody....I would ask you, or any other poster then, to explain the newest NR, and give me your interpretation as to how the GER deal is possibly better then ORV's......
Honestly, if pressed, I would probably admit that the ORV offer is a little low, and if I were a KNB shareholder, I would probably feel a little bummed about it......but that's not the big question here...through circumstances, one of these two deals is going to be accepted one way or the other......and even though as a KNB shareholder, I would probably reject both of them if I could, that's not an option.....and of the two, ORV's is by far the better offer.
When I first heard about this, I thoght there was no way it would go through, and was puzzled as to why Dynamic Metals agreed to the deal......with the details of the GER deal out, now we know
