The Australian government's Takeovers Panel has ordered to drop its 3-for-5nonrenounceable rights issue to prevent a possible takeover by the Australian goldexplorer's largest shareholder, Pacific Road Capital Management Pty. Ltd.
The federal regulator said April 8 that ABM had not taken allreasonable steps to minimize the likely control effect of the rights issue and thatthe linking of the debt facility with the rights issue, particularly given the sub-underwritingarrangement, had the potential to exacerbate the control effect.
ABM planned to raise around A$8.2 million via a 4-cent-per-sharerights issue, which was being fully underwritten by Key Pacific Advisory PartnersPty. Ltd. and fully sub-underwritten by Pacific Road Capital, which currently holdsa 19.85% stake in ABM.
The company also entered into an agreement with Pacific RoadCapital for a A$3.8 million debt facility to cash back environmental and generalperformance bonds provided by the ANZ Bank.
The facility was to be implemented simultaneously with the rightsissue and was subject to a number of conditions, including ABM granting a securityinterest over its assets.
The Takeovers Panel receivedan application from APAC Resources Capital Ltd., a wholly owned subsidiaryof Hong Kong-listed APAC Resources Ltd., in March raising concerns that the rightsissue, underwriting and debt facility arrangements were being used as a means ofgaining control of ABM without Pacific Road making a takeover offer.
APAC owns a 14.98% interest in ABM, according to SNL Metals &Mining data.
If no other shareholder took up their rights, Pacific Road wouldhave obtained voting power of up to 49.91%.
The panel said it considered that an order ending the rightsissue, and allowing ABM flexibility in structuring a new rights issue or other fundingtransaction, would be simpler and would likely be less confusing for shareholders.
ABM said in a separate April 8 statement that it will not proceedwith the rights issue, but it is seeking a review of the regulator's decision.
The company does, however, plan to go ahead with the rights issueif the decision is overturned by the review panel.