Proposed Acquisition of Stellar Diamonds
27 Janeiro 2010 - 5:30AM
UK Regulatory
TIDMWAD
RNS Number : 1694G
West African Diamonds PLC
27 January 2010
27th January 2010
West African Diamonds plc
("WAD" or the "Company")
Proposed Acquisition of Stellar Diamonds Limited
Placing to raise GBP5.0 million
Posting of Admission Document
Notice of General Meeting
Further to the announcement made on 26 October 2009, the Directors of WAD
announce that an AIM Admission Document in relation to the proposed acquisition
of Stellar Diamonds Limited ("Stellar") (the "Acquisition") is being posted to
shareholders today. It is expected that WAD shares will be restored to trading
from 7.00am today.
The Acquisition will constitute a reverse takeover of the Company under the AIM
Rules and requires the prior approval of the Company's existing shareholders. If
the resolutions are passed, it is expected that readmission of the Company (as
enlarged by the Acquisition) to AIM will take place and that trading in its
shares will commence on 22 February 2010.
RBC Capital Markets and Astaire Securities have completed a successful placing
for the Company to raise gross proceeds of GBP5.0 million (the "Placing"),
conditional on completion of the Acquisition and the readmission. The Placing
was led by RBC Capital Markets and included Astaire Securities as joint Broker.
The Company has appointed RBC Capital Markets as its Nominated Adviser and Joint
Broker with effect from today and Astaire Securities shall continue to act as
Joint Broker.
The Placing will comprise an offer of new ordinary shares of 5p each ("the
Placing Shares") to institutional and other investors. A total of 25,000,000
Placing Shares will be issued at 20p per share (taking into account a proposed 5
for 1 consolidation of the existing ordinary share capital).
A circular and notice convening a general meeting of the Company to be held at
midday on 19 February 2010 at 71 Queen Victoria Street, London EC4V 4DE is
included in the Admission Document.
Rationale for the Acquisition
- Corporate and Operational Synergies: The Company will have a number of
opportunities to harness corporate and operational synergies, thus allowing the
operational cost base per carat to be reduced.
- Accelerated Growth Strategy: Revenue streams from two producing alluvial mines
will reduce financial risk, increase cashflow and will enhance growth
possibilities.
- Strong Project Pipeline: The Company will have four high grade kimberlite
projects at various stages of development.
- Strong Management Team: the Proposed Board has significant experience in the
West African mining industry and a proven track record of developing mines.
Use of Proceeds
The proceeds from the Placing will be utilised to capitalise existing producing
mines, accelerate its production ramp up, and advance key kimberlite development
and exploration projects.
Principal terms of the Acquisition
Under the terms of the Acquisition Agreement, the Company has agreed to acquire
the entire issued and to be issued share capital of Stellar for a consideration
equating to approximately three times the value of WAD, represented by an
approximate 75:25 split of the share capital in the enlarged group prior to the
issue of Placing Shares - 75 per cent. being attributable to consideration
shares to be allotted to Stellar shareholders and 25 per cent. being
attributable to ordinary shares currently held by WAD shareholders.
Prior to the Placing but assuming the share consolidation has taken place, a
total of 53,598,496 consideration shares will be issued and allotted to the
shareholders of Stellar on the basis of 1.005 new ordinary shares in the Company
for each Stellar share.
Based on the number of Existing Ordinary Shares in issue as at the date of this
announcement (being 89,947,519) and the mid-market price of 3.875p per Existing
Ordinary Share on 26 October 2009 (the date that trading on AIM in such shares
was suspended), the total consideration for the Acquisition is therefore
approximately GBP10.4 million of consideration shares.
Completion of the Acquisition Agreement is conditional, inter alia, upon
approval of the Acquisition and certain other matters by WAD shareholders and
the Placing Agreement becoming unconditional (save as for admission).
John Teeling, Chairman, commented:
"This is a good deal for WAD shareholders and the board is pleased to support
it. The enlarged group will be on a stronger financial footing due the placing
and the cashflow from two producing mines. The West African diamond mining
industry is underdeveloped and fragmented. Stellar Diamonds will be well
positioned to exploit opportunities in the area".
Karl Smithson, Proposed CEO of the enlarged group, commented:
"We are extremely pleased to have progressed with the Acquisition and Placing
and look forward to working together with the WAD team to create value for all
shareholders."
Copies of the Admission Document are available on the Company's website
(www.westafdiamonds.com) or from RBC Capital Markets, 71 Queen Victoria Street,
London EC4V 4DE.
Enquiries:
West African Diamonds plc
James Campbell Tel: +27 83 457
3724
Stellar Diamonds Limited
Karl Smithson Tel: + 44 (0)20 7299 4212
RBC Capital Markets
Martin Eales / Daniel Conti Tel: +44 (0) 20
7653 4000
Astaire Securities
Jerry Keen / Charles Vaughan Tel: +44 (0) 20 7448
4400
Pelham Bell Pottinger
Charles Vivian / James MacFarlane Tel: +44 (0) 20 7337
1500
College Hill
Nick Elwes Tel: +44 (0) 20 7457 2020
This information is provided by RNS
The company news service from the London Stock Exchange
END
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