Genesis Phase One complete with successful placement

Company News

by Glenn Dyer

The complicated takeover of St Barbara (ASX:SBM) by Genesis Minerals (ASX:GMD) is underway with a successful $275 million share placement aimed at financing the whole transaction and early months of the merged company’s operations in 2023.

The merger process will now start, which will see St Barbara takeover Genesis (with Dacian Gold included) and a bunch of unwanted gold assets and stockmarket investments sold into a separate company.

The placement was done at $1.20 a share (which was a small premium to the pre-issue price for Genesis of $1.195) and investors scrambled to get set.

That enthusiasm saw Genesis shares leap to a day’s high of $1.535 before settling back to end the session up 12.5% at $1.345.

St Barbara shares had a similar experience, leaping to a day’s high of 81.7 cents before closing at 74 cents for a day’s gain of 13.8%.

Though the merger deal has always been seen as occurring, it has saved St Barbara shareholders from a pretty miserable time as the shares fell from 88 cents in September to a year low of 45 cents a month later after a weak annual result and outlook.

Proceeds from the placement will facilitate the merger of St Barbara and Genesis via a Scheme of Arrangement to form “Hoover House”, and demerge St Barbara’s non-Leonora assets to St Barbara shareholders to form “Phoenician Metals”.

That is expected to take around 9 months with the merged companies already promising a major strategy update in the September, 2023 quarter.

Settlement of new Genesis shares under the placement is conditional on the Scheme and Demerger becoming effective, and Genesis shareholder approval. That means the money stays raised but uncommitted until a court signs off on the deal, followed by shareholders in both companies.

The new Genesis shares will rank equally with existing Genesis shares and will be issued prior to the record date of the Scheme, with the result that the new Genesis shares will be exchanged for St Barbara shares under the terms of the scheme.

The placement was cornerstoned by AustralianSuper, Resource Capital Fund VII L.P., and other institutional investors (Paradice Investment Management, Australian Capital Equity, and Eley Griffiths Group).

Genesis CEO Raleigh Finlayson said in Wednesday’s statement,

“We are very pleased with the level of support shown by shareholders of both Genesis and St Barbara for the conditional Placement, with the strong demand received representing a clear endorsement of the proposed combination. By combining with St Barbara, we are creating Hoover House, the premium Australian gold company we envisaged, with sustainable, high-quality production.”

“The Placement will ensure balance sheet strength and flexibility for both Hoover House and Phoenician Metals post the Scheme and Demerger, and will allow Hoover House to progress organic growth opportunities across Gwalia and Tower Hill, supporting the path to +300koz pa gold production from Leonora.”

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