Mining firm enters scheme deal

Highlands Pacific Ltd has entered into a scheme implementation agreement (“SIA”) with Cobalt 27 Capital Corp, under which Cobalt 27 has agreed to acquire all of the shares in Highlands which it does not already own.
This is by way of a scheme of arrangement under the PNG Companies Act.
Cobalt 27 is currently the largest holder of Highlands’ shares, holding an interest of approximately 13 per cent.
Highlands’ chairman Ron Douglas said: “After careful consideration, the independent directors concluded that the scheme proposal, at a significant premium to market, is an attractive outcome for shareholders, given the streaming transaction would not close and the challenging environment for commodities.”
Under the terms of the scheme, Highlands’ shareholders will be entitled to receive 10.5 Australian cents (25t) per share, subject to all applicable conditions being satisfied or waived and the scheme being implemented.
The consideration represents a premium of 43.8 per cent over the closing price of Highlands’ shares on Dec 24, 2018, of 7.3 Australian cents (17t).
It implies an equity value for Highlands of approximately A$115 million (K273mil). The consideration will increase by 1.0 Australian cents (2t) per share to 11.5 Australian cents (27t) if, before Dec 31, 2019, the closing spot price of nickel1 exceeds US$13,220 (K44,478) per tonne over a period of five consecutive trading days.
The scheme will require the approval of 75 per cent of Highlands’ shareholders entitled to vote and voting at a shareholder meeting which is expected to be held in April.
The scheme also will require approval by the PNG National Court.
Highlands’ largest shareholders, collectively representing 30.1 per cent of Highlands’s shares, have stated their intention to vote in favour of the scheme in the absence of a superior proposal.
These shareholders comprise: Lim Advisors Ltd (owning 9.4 per cent of Highlands), Tribeca Investment Partners Pty Ltd (owning 8.9 per cent of Highlands) and PanAust Ltd (owning 11.8 per cent of Highlands).
PanAust’s intention to vote in favour of the scheme, in the absence of a superior proposal, is subject to board and regulatory approval in China.
PanAust is a subsidiary of Guangdong Rising Assets Management Co (“GRAM”), a Chinese state-owned enterprise.