Cobalt 27 Capital Corp. (TSXV:KBLT) entered into a scheme implementation agreement to acquire remaining 87% stake in Highlands Pacific Limited (ASX:HIG) from PanAust Limited, LIM Advisors Limited, Tribeca Investment Partners Pty Ltd. and others for AUD 99.8 million on January 1, 2019. Under the terms of the scheme, Highlands’ shareholders will be entitled to receive AUD 0.105 in cash per share. The consideration will increase by AUD 1 cent in cash per share if before December 31, 2019 the closing spot price of nickel exceeds $0.01 million (AUD 0.02 million) per tonne over a period of 5 consecutive trading days. LIM Advisors Limited owns 9.4% of Highlands, Tribeca Investment Partners Pty Ltd owns 8.9% of Highlands and PanAust Limited owns 11.8% of Highlands. Separately, Highlands has agreed with Cobalt 27 to use its best endeavors to negotiate an agreement with PanAust whereby PanAust transfers to Highlands its 11.8% stake in Highlands and cancels any outstanding debt owed by Highlands to PanAust, in return for Highlands transferring its interest in the Frieda River Joint Venture to PanAust (the “PanAust buyback agreement”). If the PanAust buyback agreement is entered into between PanAust and Highlands prior to the scheduled first court date for the scheme, PanAust's shares in Highlands would be acquired under that agreement, and not under the scheme. If the PanAust buyback agreement is entered into, it would complete immediately following implementation of the scheme. In that scenario, PanAust will not be a scheme shareholder and this would result in PanAust being ineligible to vote on the scheme. The proposed transaction entails the sale of Highlands’ interest in Frieda River to PanAust and Cobalt 27 to acquire interests in Star Mountains and Sewa Bay. AUD 61 million will be funded from cash in hand and available credit assuming the PanAust Buy Back agreement is completed. As of May 7, 2019, Cobalt 27 Capital Corp entered into an amended and restated revolving term credit facility to have access to AUD 142.32 million ($100 million) credit facility and AUD 71.16 million ($50 million) to fund the acquisition. Upon completion, Cobalt 27’s stake in Highlands will increase from 13% to 100%. In case of breach or non-satisfaction of a condition precedent or Highlands and Cobalt 27 are unable to reach agreement within five business days after the delivery of the notice under that clause or any shorter period ending on the day before the second court date, Highlands or Cobalt 27 may terminate this agreement by notice in writing to the other parties. A breakup fee of AUD 1 million is payable in case of termination. Highlands must use its best endeavors to take all action necessary to procure that any Highlands’s independent Director designated by Cobalt 27 in writing, and any Director of any subsidiary of Highlands designated by Cobalt 27 in writing, resigns their office; and cause the appointment to the Highlands’s Board and to the Boards of each subsidiary of Highlands of such persons as nominated by Cobalt 27, subject to those persons having provided a consent to act as Directors of the relevant company or companies. Cobalt 27 must provide the necessary details of its nominees to the Highlands’s Board and to the Boards of each subsidiary of Highlands Pacific, together with their signed consents to act, by the date of the scheme meeting. The scheme will require the approval of 75% of Highlands’ shareholders entitled to vote and voting at a shareholder meeting which is expected to be held in mid to late April 2019. The scheme also will require approval by the PNG National Court and is also subject to certain regulatory approvals being met. The scheme is not subject to further financing arrangements or due diligence and is not conditional on the PanAust buyback agreement being entered into, or being completed. Highlands’ largest shareholders, collectively representing 30.1% of Highlands’s shares, have stated their intention to vote in favor of the scheme in the absence of a superior proposal. These shareholders comprise Lim Advisors Limited, Tribeca Investment Partners Pty Ltd and PanAust Limited. PanAust’s intention to vote in favor of the scheme, in the absence of a superior proposal, is subject to Board and regulatory approval in China. The independent Directors of Highlands, being Ron Douglas, Ernie Gangloff and Craig Lennon, intend to unanimously recommend that all Highlands shareholders vote in favor of the scheme, and they intend to vote Highlands shares in their control in favor of the scheme, in each case in the absence of a superior proposal and subject to an independent expert concluding that the scheme is in the best interests of shareholders. As of March 12, 2019 meeting of shareholders of Highlands Pacific will be held on April 30, 2019. As of April 30, 2019, shareholders of Highlands Pacific Limited approved the transaction. The Independent Expert, Deloitte Corporate Finance Pty Ltd, has concluded that the Scheme is fair and reasonable to the Highlands shareholders. On May 2, 2019, National Court of Papua New Guinea approved the transaction. The transaction is expected to complete in early May 2019. As of April 30, 2019, scheme implementation date is May 17, 2019. The transaction is expected to be accretive to Cobalt 27 shareholders. Craig Chipperfield of Grant Samuel Group Limited acted as financial advisor, Computershare Investor Services Pty Limited acted as registrar and Guy Alexander and Richard Kriedemann of Allens acted as legal advisors to Highlands Pacific Limited. Mark Williamson, Sina Kassra, Mark Gordon, Christopher Lyons, Egor Serov and Sam Blight of Piper Alderman and Maurice Swan and Steve Bennett of Stikeman Elliott LLP acted as legal advisors and Scotiabank and Argonaut acted as financial advisors to Cobalt 27. Deloitte Corporate Finance Pty Ltd acted as independent expert in the transaction for Highlands. King & Wood Mallesons acted as legal advisor to PanAust. Dentons Canada LLP acted as legal advisor to Cobalt 27. Cobalt 27 Capital Corp. (TSXV:KBLT) entered into a scheme implementation agreement to acquire remaining 87% stake in Highlands Pacific Limited (ASX:HIG) from PanAust Limited, LIM Advisors Limited, Tribeca Investment Partners Pty Ltd. and others on May 17, 2019.