Shares in MC Mining fell 7% on the JSE yesterday to R1.85 as a battle for the control of the company turned bitter.
MC Mining’s board, which is against its acquisition by Goldway Capital, on Monday accused the Georgia, US-based Goldway Capital of releasing misleading information in a bid to sway shareholders in favour of its acquisition move.
Goldway Capital has put up an A$0.16 (R1.98) off-market offer for all of the shares it does not currently hold.
The independent board committee (IBC) of MC Mining has “unanimously” recommended that shareholders “do not accept” the offer by Goldway, after an independent expert advised the offer was “neither fair nor reasonable” for the target company.
“The IBC believes shareholders should have more regard to the independent expert's report than the misleading valuation statements made by Goldway, which is neither an expert nor independent,” MC Mining said on Monday.
BDO Corporate Finance acted as the independent expert for MC Mining, whose value it assessed between A$0.214 and A$0.356, prior to the offer by Goldway.
MC Mining, based on advice from the BDO Corporate Finance report, prefers a valuation of A$0.285 per share on a controlling interest basis.
This has sparked a bitter dispute between directors in MC Mining and Goldway. MC Mining said Goldway's statements in its second and third supplementary bidder's statements had falsely claimed that the Vele Aluwani colliery (Vele) is under care and maintenance and that shareholders faced imminent risk of insolvency from this.
“These statements are inaccurate and there has been no change in the status of the assets or financial position of MCM which were considered by the independent expert. The independent expert has confirmed to MCM their valuation approach and findings and that no changes are required to be made to either the independent expert's report,” said Nhlanha Nene and Khomotso Mosehla, chairpersons of MC Mining and its independent board committee, respectively.
The MCM independent board committee has also challenged the valuation of the company by Goldway, saying the company is not an “independent valuation” expert as it has “vested interests” in justifying its views on appropriate valuation.
According to Goldway Capital, its off-market takeover offer for MC Mining will close on April 5 but “contains a condition which cannot be waived that Goldway needs to have received acceptances for at least 50.1% or more of the MCM Shares that it does not have a relevant interest” in.
“If the minimum acceptance condition is satisfied by 5 April 2024, Goldway’s present intention is to declare the offer unconditional on the date that Goldway notifies the market that the minimum acceptance condition has been satisfied,” Goldway said in a notice on Friday.
However, according to MC Mining, if Goldway fails to reach a combined relevant interest of 82.19% by April 5, its offer acceptance condition will not be satisfied and the offer period will not extend by 10 business days.
“Goldway's offer will fail and lapse on April 5, 2024. Any acceptances received by Goldway will be rescinded and no legal title in the shares will pass to Goldway. In the event of failure of the bid, subsequent to April 5, 2024, the board of MC Mining will then be able to recommence the capital and fund-raising initiatives that have been stymied since early August 2023 due to the conditions imposed by Goldway in relation to its offer,” said MC Mining.
MCM was considering various financing opportunities for the company’s assets, including alternatives to equity funding, which would not involve any dilution to shareholders.
It said shareholders who sold their shares would forego the opportunity to participate in the exploration and production potential of MCM's development assets. The board committee of MC Mining was also of the view that there were suitable pathways to Makhado reaching income-producing operations.
“Goldway has also stated that the independent expert has failed to address certain disadvantages or risks of solvency, dilution, financing and liquidity risks and cash costs associated with operating MC Mining. All of these risks are typically faced by a developer,” said MC Mining.
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