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Pala Investments improves takeover offer for Cobalt 27 by C$30M

Pala Investments Ltd. increased by C$30 million the cash consideration for its proposed acquisition of shares in Cobalt 27 Capital Corp. that it does not already own.

Pala, which supports mining-related ventures, already owns about 19% of Cobalt 27 and played a role in its 2017 launch.

Under its "best and final" offer, Pala agreed that for each Cobalt 27 share, it will pay C$4.00 in cash and C$1.92 in shares of Nickel 28, a planned spinout that will hold some of Cobalt 27's assets.

The total consideration of C$5.92 per Cobalt 27 share represents a 71% premium to the company's unaffected closing price on the TSX Venture Exchange on June 17.

A termination fee payable to Pala in case of a superior proposal was halved to C$7.8 million. Pala's interest in Nickel 28 will also increase to 9.9% from 4.9%. Pala will still repay Cobalt 27's debt, leaving Nickel 28 debtless and US$5 million cash upon closing.

In the previous offer, which valued Cobalt 27 at C$501 million, Pala agreed to pay C$3.57 in cash and C$2.18 in Nickel 28 shares for each Cobalt 27 share.

Cobalt 27 said Oct. 1 that a special committee of independent directors deemed Pala's bid as fair, while Cobalt 27's board recommended that shareholders vote in favor of the deal during an annual and special meeting on Oct. 11. Closing is expected by the end of the month.