The planned merger between gold producer Bendigo Mining Ltd
(ASX:BDG) and BCD Resources NL has been terminated, following problems over a potential loan default.
Both companies entered into a scheme implementation agreement in July after which Bendigo agreed to provide a pre-completion loan of up to $8 million, and advanced $5 million to BCD under the loan agreement.
In October, Bendigo said it received information from BCD that led it to issue a notice of potential default on the loan agreement, and Bendigo cautioned on Monday that it would terminate the deal by Wednesday if the default was not remedied.
Bendigo today advises that both companies have agreed to end the merger, with BCD agreeing to fully repay Bendigo’s $5 million pre-completion loan and outstanding interest.
Bendigo says the board believes this negotiated outcome is in the best interests of the company and its shareholders.
Bendigo Mining increased its net profit by 36 per cent in the 2010 financial year to post a profit of $11.19 million.
