UCL responds to Mawarid takeover bid


Transcription of Finance News Network Interview with UCL Resources Limited (ASX:UCL) CEO, Chris Jordinson

Donna Sawyer: Hello I’m Donna Sawyer from the Finance News Network and joining me from UCL Resources Limited (ASX:UCL) is Chief Executive Officer, Chris Jordinson. Chris thanks for joining me.

Chris Jordinson: Thank you for the invitation and I look forward to passing on our message to our shareholders.

Donna Sawyer: Mawarid Mining LLC has made an on market takeover bid for all shares in UCL Resources. What are the details of the bid?

Chris Jordinson: The bid effectively is a cash offer; it’s an on market cash offer. So any shareholder, who would like to accept the bid, needs to contact their broker and then exchange the shares on the ASX trading platform. The bid itself is unconditional and is at very attractive premiums, based on the current share price pre the bid. Pre the bid, our share price was around 11 cents and the bid is at 31 cents.

Donna Sawyer: What was UCL Resources’ market capitalisation prior to the bid, and what does Mawarid’s bid value the Company at?

Chris Jordinson: So UCL’s market capitalisation before the bid was at around about $11 million. That’s based on 100 million plus shares that we have on issue, at the share price of 11 cents. The Mawarid bid at 31 cents placed the market capitalisation on UCL, or at least a valuation sorry - not a market capitalisation, of around about $30 million.

Donna Sawyer: What is your initial response to the takeover bid?

Chris Jordinson: As all Board’s would do, we’ve commissioned an independent expert to get a fair and reasonable report. That independent expert will also involve a technical expert, to review the project and provide the shareholders with a range of what the valuation is deemed to be, and whether or not it is fair and reasonable.

Donna Sawyer: So what steps will you take now?

Chris Jordinson: Moving forward, obviously we will complete our target statement that will be mailed to shareholders within 14 days of yesterday, which was when the bid was lodged. That target statement will obviously give the Board’s opinion and also be supported by the independent experts’ opinion, of whether or not the offer’s fair and reasonable. But day to day business, UCL will continue as it has for the past three years under my stewardship and move forward, and continue the development of the Sandpiper Marine phosphate project in Namibia.

Donna Sawyer: What do you expect to be telling shareholders regarding a takeover bid, and what’s the timeline for that communication?

Chris Jordinson: Timeline – look the next 14 days we have to prepare a target statement, which will then effectively set out the UCL directors’ opinion on the offer that’s obviously been received. During that period, however, the shareholders are free to trade their shares as they see fit and well. It’s not up to us for the next 14 days and the reason an on market bid has been made to shareholders, is to give them the choice.
As of yesterday, we traded over 30 million shares once the bid was lodged in the market. That gave Mawarid an ownership position of around about 49.7 per cent of the Company. So it was obviously very well received in yesterday’s market. And if today’s market is anything like yesterday, we expect control to pass over to Mawarid, obviously breaching the 50 per cent position.

Donna Sawyer: UCL is currently focusing on the development of its 42.5 per cent stake in the Sandpiper Marine phosphate project. What are your concerns in terms of funding that project?

Chris Jordinson: UCL doesn’t necessarily have a concern. We introduced a strategy a number of years back, where we sought a cornerstone financial investor and that was Mawarid, who came on board in May last year. So we, as such, do not have a concern. However, looking at our current market capitalisation of $11 million and then having to raise UCL’s share of the development funds for the Sandpiper project, which is in the order of $80 to $90 million. That’s eight or nine times our current market capitalisation. In the current economic climate, people would say that would be very difficult. UCL obviously remained confident that it had the ability to do it. However, under the current climate, it could possibly prove difficult.

The Mawarid offer that was launched, the bid that came in yesterday, is against the market. As I’ve said previously, pre the bid is a very good premium and would allow shareholders to make up their own decision, because it’s an on market bid. And you know the project, the simplification of the ownership structure of the project will make it, or quite possibly will make it, easier to finance going forward.

Donna Sawyer: Finally aside from working through the takeover offer, what are the key goals for UCL Resources in 2013?

Chris Jordinson: So UCL’s key goals haven’t changed. The development of the Sandpiper Marine phosphate project is priority, no two ways about that. We’ll continue to work with the debt financiers in Southern Africa. We’re also continuing to work with equity providers and independent consultants to progress the project. And so as such, in effect, nothing has changed. It’s business as usual and onwards and upwards for the Sandpiper Marine phosphate project.

Donna Sawyer: Chris Jordinson thanks for the update.

Chris Jordinson: Thank you Donna and thank you for inviting me in and to our shareholders and your listeners, thank you very much for listening.