Catalpa and Conquest score big institutional backing
THE BOURSE WHISPERER: The proposed merger between two of Australia’s highly regarded junior gold producers Catalpa Resources and Conquest Mining has attracted the attention of some big hitting new investors to the newly formed shareholder registry.
Catalpa and Conquest announced an all scrip merger of equals and concurrent acquisition of Newcrest’s Cracow and Mt Rawdon gold mines in June this year that would create a leading growth-focused Australian gold company.
As part of the proposition, it was also announced that the merged group would undertake a pro-rata renounceable entitlement offer to raise approximately $150 million.
The rationale behind the raising was in order for the combined group to be suitably capitalised to realise the full development and exploration potential of its assets and achieve its growth ambitions.
The renounceable entitlement issue will take place shortly after the transaction is implemented so that shareholders of both Catalpa and Conquest can participate.
At the request of the two companies, Newcrest has agreed not to take up its entitlement of approximately $57million so the merged entity can be allowed to broaden its investor base.
The opening for new investors was not left open for long with Catalpa and Conquest announcing two leading global investors in gold equities have joined the party.
United Kingdom-based Blackrock Investment Management and Baker Steel Managed Funds have committed to subscribe for a total of $50 million of new shares.
This represents a healthy portion of the entitlement Newcrest agreed not to take up under the entitlement offer.
“Bruce and I have enjoyed widespread support for the merger since we announced the deal but a number of institutional investors are waiting to review the Scheme documentation and see greater certainty that the deal will be implemented before investing,” Conquest Mining executive chairman Jake Klein said in an announcement from the two companies.
“That being the case, it is especially pleasing to have this early support and endorsement of the deal from global resources investors of the calibre of Blackrock and Baker Steel.”
Catalpa Resources managing director Bruce McFadzean said his company had also been encouraged by the response the proposed merger had received.
“Like Conquest, we have also had very positive feedback from shareholders and investors alike about the industrial logic of the deal and the potential for the combined group to deliver long term sustainable growth in value,” McFadzean said.
“This commitment of investment represents a significant vote of confidence as we progress with this transaction and it is great to see two of the world’s most respected investors in gold equities being prepared to endorse the merits of this deal at such an early stage.”
The Scheme is expected to be implemented in October with the proposed equity raising to be launched shortly after.