PERILYA TARGET’S STATEMENT ADVISES: “REJECT CBH’S OFFER”

 


 

Perilya (ASX:PEM), the New South Wales zinc and lead miner, today lodged its Target’s Statement in response to CBH Resources Limited ’s (CBH) Bidder’s Statement, advising Perilya shareholders to reject CBH’s unsolicited offer.

Perilya Chairman, Patrick O’Connor told shareholders that Perilya is well-managed, with world-class assets, which had attracted a superior alternative cash-based proposal to CBH’s all-scrip bid, from Zhongjin Lingnan Nonfemet Co. Ltd (Zhongjin).

“We have secured the financial and strategic support of Zhongjin via the proposed placement of shares for $45.5 million in cash for Perilya at a 53% premium to Perilya’s last traded share price before the proposed share placement was announced on 9 December,” Mr O’ Connor said.

“By contrast, the offer by CBH at current share prices is at a significant discount to the proposed Zhongjin placement, and does not deliver immediate or certain cash to the Company.

“Given the current debt position of CBH, a merger with CBH would move Perilya into a net debt position with significant interest payments, during a time of depressed metal prices and volatile markets,” he said.

Perilya Managing Director, Paul Arndt added that Perilya’s Board found no compelling financial or operational logic for merging Perilya and CBH at current metal prices.

“While the merger could save CBH around $70 million, CBH failed to demonstrate in its Bidder’s Statement how a merger would benefit Perilya shareholders,” Mr Arndt said.

“Under CBH’s proposed merger, Perilya shareholders would be giving away half of their company while contributing more than 60% of the merged entity’s metal production. There is no incentive in there for our shareholders.

“We also have serious concerns about CBH’s Endeavor operation which has been down-sized for the third time this year alone, and the high capital costs that would be required to bring CBH’s Rasp and Panorama assets into production.  

“We estimate CBH’s development costs for these two projects to be in the region of $300 million and we would be seriously concerned about CBH’s ability to raise that kind of money given its high debt levels, especially in the context of the current market.

“We are delighted with Zhongjin’s more attractive alternative proposal. The fact that Zhongjin’s is a cash-based proposal will support the other measures Perilya has taken in the past year to ensure the Company is well-positioned to weather a prolonged period of low metal prices.

“Zhongjin is China’s third largest zinc producer, and is committed, as are we, to supporting future opportunities for Perilya and its shareholders,” Mr Arndt said.

Perilya’s proposed placement of shares to Zhongjin is subject to shareholder approval at an Extraordinary General Meeting to be held in February 2009, the notice of which will be distributed by early January.