St Barbara has issued a statement to “correct the record” regarding its engagement with eager counterparty Silver Lake Resources.
In increasing its bid to acquire St Barbara’s Leonora gold assets late last week, Silver Lake said that despite its efforts to engage St Barbara, there had been no reciprocal interest.
“Silver Lake has sought constructive engagement with the St Barbara board over the last 12 months to explore a potential transaction in the interests of both sets of shareholders, including approaching St Barbara prior to the announcement of its proposed nil premium corporate transaction with Genesis Minerals Ltd in December 2022,” Silver Lake said in a statement.
“However, at no stage has St Barbara or its advisers meaningfully engaged with Silver Lake.”
But St Barbara believes this is not the case, suggesting Silver Lake had its opportunity to submit a proposal in 2022 when the former was engaged with Genesis and Red 5 regarding potential merger discussions.
“St Barbara confirms that Silver Lake first approached St Barbara in mid-2022 and subsequently in September 2022 regarding an acquisition of St Barbara,” St Barbara said in a statement.
“At that time St Barbara was engaged in merger opportunity discussions with three other companies (including Genesis and Red 5 Limited), each with logical potential synergies with St Barbara’s Leonora assets.
“At this time Silver Lake was given the opportunity to submit a non-binding indicative offer so that St Barbara could assess the merit of the Silver Lake interest relative to the proposals being developed by others, but Silver Lake declined to do so.
“St Barbara proceeded to transact with Genesis following extensive reciprocal due diligence, with the initial merger announcement being made on 12 December 2022.”
St Barbara used the announcement to reiterate its intention to stay the course with Genesis, highlighting several reasons why it won’t be proceeding with Silver Lake.
“St Barbara notes that while the revised non-binding, indicative and conditional proposal (from Silver Lake) contemplates additional cash which would support the liquidity of St Barbara going forward, the proposal remains non-binding and unacceptably conditional and contrasts to the fully documented, fully financed and shareholder-supported binding Genesis transaction,” St Barbara said.
St Barbara indicated it would need to terminate its binding transaction with Genesis for any Silver Lake deal to occur, leading to $400 million lost in a Genesis capital raising. While Silver Lake would still, at a minimum, require its shareholder approval.
“In this situation, the Silver Lake transaction would become an ‘option’ for Silver Lake, with St Barbara shareholders entirely exposed to the outcome of the Silver Lake shareholder vote and the potential failure to satisfy any other remaining conditions precedent,” St Barbara said.
“No indication of Silver Lake shareholder support has been provided by Silver Lake (notwithstanding St Barbara’s written request), and St Barbara has no basis for expecting that Silver Lake can deliver a satisfactory level of certain shareholder support in the time available.”
St Barbara said it wasn’t confident Silver Lake would even be able to receive shareholder approval given the latter’s trading patterns of late, with the Silver Lake share price declining 19 per cent between the announcement of its initial proposal May 4 ($1.270 per share) to its closing share price on May 22 ($1.035).
In contrast, Genesis had received support from 49 per cent of shareholders for its proposal as of May 19.
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