Western Canadian Coal Corp said it agreed to acquire London-based coal producer Cambrian Mining Plc in an all-stock deal valued at C$120 million ($104.1 million) to boost its coal assets.
Western said it will issue 0.75 of its common shares for each share of Cambrian. Based on Western's closing price on May 19, the deal values each Cambrian share at 57 pence, representing a premium of 21 percent over Cambrian's closing price of 47 pence on May 20.
Upon completion of the acquisition, Western will issue about 88.6 million new common shares, representing about 29.5 percent of its issued and outstanding shares.
Cambrian, which owns 34 percent of Western and owns C$29 million of Western's convertible debentures, has been instrumental in developing Western's mines and bringing them into operation.
Western said the deal would expand its coal reserves and resources by 39 percent and 50 percent, respectively.
The acquisition is also expected to boost Western's current coal production by 100 percent to about 3.5 million tonnes, with the potential to grow to over 10 million tonnes per year.
Through this deal, Western said it will acquire 100 percent of low-cost metallurgical and thermal coal mines in West Virginia, 50.6 percent of a thermal coal mine in UK, 45 percent of Xtract Energy and 100 percent of Cambrian's unit AGD Mining.
Cambrian holds 45.3 percent of the issued share capital in Xtract Energy.
The deal adds thermal coal to Western's existing product mix of hard coking coal and low-vol pulverized coal injection (PCI) coal.
Western said that Audley European Opportunities Master Fund Limited, which owns about 24.7 percent of Cambrian ordinary shares, has agreed to vote in favor of the deal.
The parties expect to close the deal in early July 2009.
Cambrian's Canadian financial advisor in the deal is GMP Securities LLP. Western is being advised by Cormark Securities Inc and Cenkos Securities PLC.
SourcE: Reuters
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