Eurasian Natural Resources Corp. (ENRC)’s three founders, leading a group seeking to take the Kazakh miner private, received a three-week extension to today’s deadline to make a bid for the company.
The U.K. Takeover Panel agreed to give the group of buyers until June 24, an independent committee set up by ENRC’s board said in a statement.
The committee asked for the extension after it received “written assurances from the Consortium that it has made considerable progress towards making” an offer for ENRC, it said. The committee requested the extension with the expectation that any revised offer will take into account its view that the initial proposal was too low, the statement shows.
Alexander Machkevitch, Patokh Chodiev, Alijan Ibragimov and the Kazakh government, together holding 54 percent, sent a letter to the committee in May detailing an offer at 175 pence in cash plus 0.231 shares of 26 percent-holder Kazakhmys Plc. That’s equivalent to 260 pence a share based on a 370-pence Kazakhmys price, the committee said May 20, concluding that the offer “materially undervalues” ENRC.
The founders of the iron-ore and ferroalloys producer are seeking to take the company off the market five years after it sold shares in an initial offering for 540 pence each in London. ENRC has lost about 43 percent in value in a year as it fights corruption allegations relating to its operations in Kazakhstan and Africa.
The U.K.’s Serious Fraud Office said April 25 it began an investigation into alleged fraud and bribery at London-based ENRC operations, including in the Democratic Republic of Congo.
The founders are raising $1.6 billion to fund the cash component of the buyout, and the government is offering its 26 percent stake in London-based Kazakhmys Plc (KAZ), people familiar with the matter said last month, asking not to be identified because the information isn’t public.
The bidding group last week asked ENRC’s independent committee for a minimum three-week extension to the existing deadline of 5 p.m. on June 3 to formalize the initial proposal or to drop the plan, two people with knowledge of the matter, asking not to be identified, said on June 1. While legal complexities around forming the bidding group have delayed the proposal, there’s no issue around funding, one of the people said.
ENRC gained 1.8 percent to 244.3 pence by the close in London, valuing the company at about $4.83 billion.
Kazakhmys said the extension should provide time for discussions to continue and allow the bidders group to forward a formal proposal.
“This is a complicated situation, given the current difficulties ENRC is experiencing,” Kazakhmys Chairman Simon Heale said in a statement. “Should a proposal be tabled, the board of Kazakhmys will remain focused on the best interests of all its shareholders having regard to all relevant factors.”
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