Newfield Resources Ltd. is acquiring Stellar Diamonds Plc and targeting a A$33 million capital raising through an entitlement offer for approximately A$30 million and a private placement for another A$3 million.
Newfield said March 12 that the two companies have agreed on terms, after starting discussions for the merger in early February.
Stellar shareholders will receive 0.7622 of a new Newfield share for every share held, valuing Stellar at about £7.7 million based on Newfield's March 9 closing price of 29 Australian cents per share and prior to the completion of the financings.
Newfield expects to issue about 95.1 million shares as consideration, resulting in Stellar shareholders having about a 16.37% interest in the company's enlarged share capital following completion of the transactions.
The acquisition remains subject to approval by Stellar shareholders. The company's board recommended the approval of the deal, and the merger is expected to become effective April 26.
The entitlement offer, which is underwritten by Townshend Capital Pty. Ltd. and partially subunderwritten by a Newfield shareholder, will comprise approximately 200,231,668 shares at 15 Australian cents apiece, subject to the completion of the Stellar deal. The offering is scheduled to close April 6.
Newfield will use the proceeds from the entitlement offer to develop Stellar's Tongo-Tonguma diamond property in Sierra Leone, to repay Stellar's outstanding loan notes and accrued interest totaling about US$3.2 million, and for general working capital and transaction costs.
The placement will consist of 15 million shares at 20 Australian cents apiece, subject to shareholder approval that will be sought April 11. Newfield will use the proceeds for its existing projects, including ongoing exploration at its Allotropes diamond project in Sierra Leone and gold projects in Western Australia, and for general working capital.
