More and more interest will be driven to Argentina by this corporate fight. Bailout 2.0 with 2 trillion on the line will make recent low commodities prices history within couple of months.
Minera share issue meets resistance
ANDY HOFFMAN
MINING REPORTER
February 11, 2009
In the past, Robert McEwen has fashioned himself as an advocate for shareholder rights. In 2006, the former chairman and largest single shareholder of Goldcorp Inc. sued the company in an Ontario court, trying to block its plans to increase its share count by a whopping 67 per cent without giving shareholders a vote.
That effort ultimately failed but Mr. McEwen is now on the other end of a massively dilutive share issue.
Minera Andes Inc., a cash-strapped junior miner that owns a 49-per-cent stake in the San Jose silver and gold project in Argentina, unveiled plans for a $40-million private placement this week. Under that deal, Mr. McEwen, who is a director of the company and already its largest shareholder, will buy 121 million Minera shares at 33 cents each. If successful, the financing will increase Minera's outstanding share count by 64 per cent and raise Mr. McEwen's stake in the company to 54 per cent from 24 per cent.
"I'd say, under the circumstances, the company found itself in a position where it had very few choices," Mr. McEwen said in an interview.
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Not everyone agrees. Britain's Hochschild Mining PLC is crying foul over the plan and says Minera is ignoring a takeover offer it has made for the company.
Roberto Danino, Hochschild's deputy chairman, said his company made two proposals to Vancouver-based Minera on Friday. The first proposal was to purchase Minera's 49-per-cent stake in the San Jose project for $70-million (U.S.). Hochschild, which is the project's operator and owns the remaining 51 per cent of the mine, said the offer for Minera's stake represents a cash consideration of about 45 cents (Canadian) a share.
Secondly, Hochschild said it presented an all-stock takeover bid for all the outstanding shares of Minera consisting of 0.22 Hochschild shares for each Minera share. Based on Friday's closing share price, the bid would value Minera at about 62 cents a share.
Minera has yet to disclose the Hochschild proposals to its shareholders and instead it unveiled plans on Monday for the private placement with Mr. McEwen.
"That offer being accepted when there are clearly two superior offers on the table that take away all of their financial distress problems, all this is being done without consulting the shareholders. I really do believe that shareholders must be made aware of these offers," Mr. Danino said.
Mr. McEwen made his offer to a special committee of Minera directors on Thursday. Hochschild made its proposal on Friday. The special committee and the company's financial advisers evaluated the proposals over the weekend.
Allan Marter, who heads the special committee, said the company accepted Mr. McEwan's offer because it was "firm" and because Minera was under "very severe" time pressure.
Minera is facing major financial stress because of an $11.3-million (U.S.) cash call triggered by Hochschild and due Feb. 17. If the company could not come up with the money, its stake in the San Jose mine would be diluted down to less than 40 per cent. If that happened, Minera would then be offside on its covenants regarding a $17.5-million bank loan.
There have been several discussions and potential offers for Minera over the past 15 months that "haven't come to anything," Mr. Marter said.
Mr. McEwen echoed that sentiment, saying he gives "very little credibility" to the Hochschild proposal because the London company has "poisoned the well" during past negotiations.
Hochschild said its offers to Minera will expire today at 5 p.m. London time.
MINERA ANDES (MAI)
Close: 54¢, up 5.5¢
ANDY HOFFMAN
MINING REPORTER
February 11, 2009
In the past, Robert McEwen has fashioned himself as an advocate for shareholder rights. In 2006, the former chairman and largest single shareholder of Goldcorp Inc. sued the company in an Ontario court, trying to block its plans to increase its share count by a whopping 67 per cent without giving shareholders a vote.
That effort ultimately failed but Mr. McEwen is now on the other end of a massively dilutive share issue.
Minera Andes Inc., a cash-strapped junior miner that owns a 49-per-cent stake in the San Jose silver and gold project in Argentina, unveiled plans for a $40-million private placement this week. Under that deal, Mr. McEwen, who is a director of the company and already its largest shareholder, will buy 121 million Minera shares at 33 cents each. If successful, the financing will increase Minera's outstanding share count by 64 per cent and raise Mr. McEwen's stake in the company to 54 per cent from 24 per cent.
"I'd say, under the circumstances, the company found itself in a position where it had very few choices," Mr. McEwen said in an interview.
Print Edition - Section Front
Enlarge Image
Not everyone agrees. Britain's Hochschild Mining PLC is crying foul over the plan and says Minera is ignoring a takeover offer it has made for the company.
Roberto Danino, Hochschild's deputy chairman, said his company made two proposals to Vancouver-based Minera on Friday. The first proposal was to purchase Minera's 49-per-cent stake in the San Jose project for $70-million (U.S.). Hochschild, which is the project's operator and owns the remaining 51 per cent of the mine, said the offer for Minera's stake represents a cash consideration of about 45 cents (Canadian) a share.
Secondly, Hochschild said it presented an all-stock takeover bid for all the outstanding shares of Minera consisting of 0.22 Hochschild shares for each Minera share. Based on Friday's closing share price, the bid would value Minera at about 62 cents a share.
Minera has yet to disclose the Hochschild proposals to its shareholders and instead it unveiled plans on Monday for the private placement with Mr. McEwen.
"That offer being accepted when there are clearly two superior offers on the table that take away all of their financial distress problems, all this is being done without consulting the shareholders. I really do believe that shareholders must be made aware of these offers," Mr. Danino said.
Mr. McEwen made his offer to a special committee of Minera directors on Thursday. Hochschild made its proposal on Friday. The special committee and the company's financial advisers evaluated the proposals over the weekend.
Allan Marter, who heads the special committee, said the company accepted Mr. McEwan's offer because it was "firm" and because Minera was under "very severe" time pressure.
Minera is facing major financial stress because of an $11.3-million (U.S.) cash call triggered by Hochschild and due Feb. 17. If the company could not come up with the money, its stake in the San Jose mine would be diluted down to less than 40 per cent. If that happened, Minera would then be offside on its covenants regarding a $17.5-million bank loan.
There have been several discussions and potential offers for Minera over the past 15 months that "haven't come to anything," Mr. Marter said.
Mr. McEwen echoed that sentiment, saying he gives "very little credibility" to the Hochschild proposal because the London company has "poisoned the well" during past negotiations.
Hochschild said its offers to Minera will expire today at 5 p.m. London time.
MINERA ANDES (MAI)
Close: 54¢, up 5.5¢
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