ASX Market Announcements
ASX Limited
20 Bridge Street
Sydney NSW 2000
23 June 2014
Dominic D Smith
Vice President & Company Secretary
Aurizon Holdings Limited
ABN 14 146 335 622
T +61 7 3019 9000
F +61 7 3019 2188
E CompanySecretary@aurizon.com.au
W aurizon.com.au
Level 17, 175 Eagle Street
Brisbane QLD 4000
GPO Box 456
Brisbane QLD 4001
Joint off-market bid for Aquila Resources Limited - Bidders' response to Target Statement
Please find attached announcement for immediate release to the market. Yours faithfully
VP & Company Secretary
We refer to the joint takeover offer by Baosteel Resources Australia Pty Ltd (ABN 66 154 815 362) (Baosteel) and Aurizon Operations Limited (ABN 47 564 947 264) (Aurizon) (together, the Bidders) to acquire 100% of the ordinary shares in Aquila Resources Limited (Aquila) that they do not already own for A$3.40 per share (the Offer).
The Bidders welcome the release of Aquila's Target's Statement. The Target Statement includes the
Independent Expert report, which is available at www.asx.com.au
The Independent Directors stated the following reasons to ACCEPT the Offer:
1. While the Independent Expert concluded that the Offer is not fair, the Independent Expert also concluded that it is reasonable.
2. The trading price of Aquila Shares is likely to fall if the Offer is unsuccessful and in the absence of a superior proposal.
3. The Bidders are bound by their announced statement that they will not increase the Offer Price or extend the Offer Period (except in certain limited circumstances).
4. No superior proposal has emerged as at the date of the Target's Statement.
Section 2 of the Target's Statement discusses these reasons in more detail.
The Bidders also refer Aquila Shareholders to section 1 of the Bidders' Statement, which provides further reasons why the Bidders consider Aquila Shareholders should ACCEPT the Offer.
The Independent Expert made the following comments in reaching its conclusion:
1. Aquila shares were trading at levels well below the Offer Price immediately before the Offer was announced. The Offer Price represents a significant premium.
2. Without the involvement of a major industry participant with substantial funding capacity, Aquila does not have a clear path forward to the financing and development of West Pilbara and does not have the financial and other resources to concurrently progress its other pre-development assets. In this context, given current market conditions, it is to be expected that the share market will not attribute meaningful value to Aquila's pre-development assets.
3. The Aquila share price fell sharply when the Bidders announced that they would not increase the Offer Price. The risk of a further fall in the share price in the absence of the Offer is exacerbated by the recent weakness in the iron ore market, with the benchmark iron ore price having fallen by around 15% since the announcement of the Offer.
4. Mr Tony Poli, Aquila's executive chairman, has flagged his intention to accept the Offer in respect of his
28.92% shareholding (in the absence of a superior proposal). Together with Baosteel's existing shareholding, this would give the Bidders a shareholding of almost 49% of Aquila and effective control.
The Offer is open now for acceptance and the Bidders encourage you to ACCEPT now.
For professional investors1 that hold or beneficially own at least 147,0592 Aquila shares, the Bidders have established an institutional acceptance facility (IAF). Those shareholders may request the IAF participation forms from the facility operator by email to custodian@computershare.comor phone on 1800 095 862 (callers within Australia) and +61 3 9415 5401 (callers outside Australia), or from the Financial Advisers of the Bidders (details of which are below).
Director
Baosteel Resources Australia Pty Limited
ABN 66 154 815 362
Level 20, Allendale Square
77 St Georges Terrace
Perth W A 6000
AUSTRALIA
Mr Dominic D Smith
Director
Aurizon Operations Limited
ABN 47 564 947 264
Level 17
175 Eagle Street
Brisbane QLD 4001
AUSTRALIA
For further information regarding the Offer, please contact the Bidder's advisers: Financial adviser (Baosteel):
Damian Pearson, Deutsche Bank
Tel: +61 420 987 851
Paul Glasson. Satori Investments
Tel: +61 409 354 109
Greg Baxter, Newgate Communications
Tel: +61 419 461 368
Mark Hairsine, Aurizon
Tel: + 61 418 877 574
Offer Information Line:
Within Australia (toll-free): 1300 309 589
Outside Australia: +61 2 8022 7902
Offer Website: www.aquilaoffer.com.au
1 As defined in the Corporations Act.
2 Being the number of Aquila shares with an aggregate value of at least A$500,000, assuming a share price of A$3.40.
3 Subject to any automatic extension under the Corporations Act.
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