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Ampella Mining AMX
February 23, 2014 - 2:18pm EST by
value_31
2014 2015
Price: 0.19 EPS $0.00 $0.00
Shares Out. (in M): 248 P/E 0.0x 0.0x
Market Cap (in $M): 46 P/FCF 0.0x 0.0x
Net Debt (in $M): -10 EBIT 0 0
TEV (in $M): 36 TEV/EBIT 0.0x 0.0x

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  • Technology
  • Merger Arbitrage
  • Mining
  • M&A (Mergers & Acquisitions)
 

Description

Straight forward merger arbitrage situation.  Gross return 7%.  IRR is >100% (deal consideration will be paid no later than 1 month after tendering shares).  Deal has been declared unconditional so there is zero deal risk and zero timing risk (i.e. AMX shareholders tendering shares today must, under Australian takeover law, receive consideration no later than one month after tendering their shares).  Given the short dated nature of the investment arguably IRR is not especially meaningful but notwithstanding, this isn't a bad short term place to risklessly park some cash (7% riskless for a month). 
 
Deal Summary
  • Ampella Mining ("AMX") shareholders will receive one share in Centamin Mining ("CEY") for every 5 shares of AMX owned.  CEY is listed on the London Stock Exchange
  • Friendly Transaction. Announced 10 December 2013. Uninamously recommended by the AMX Board.  AMX's largest shareholder plus all AMX Directors entered into pre-bid agreements agreeing to accept the bid
    • Deal announcement: http://www.asx.com.au/asxpdf/20131210/pdf/42ljgryn3vl0h6.pdf
    • Bidder Statement: http://www.asx.com.au/asxpdf/20140107/pdf/42m0qqz1nb88b0.pdf
  • CEY currently owns 49% of AMX (http://www.asx.com.au/asxpdf/20140219/pdf/42mtcd88p66f64.pdf)
  • Deal was declared unconditional on 20 February 2014 (http://www.asx.com.au/asxpdf/20140220/pdf/42mvhxkmj0g2r9.pdf) 
    • "If you accept the Offer, and the Offer becomes unconditional, Consideration Shares will be issued to you on or before the earlier of one month after the Offer becoming unconditional or 21 days after the end of the Offer Period." (p.14 Bidder Statement, link above)
    • As the Offer has been declared unconditional AMX shareholders tendering shares must receive consideration no later than one month after tendering shares
  • Deal closes 27 February 2014 (unless extended)
    • So there is no confusion a deal extension has no detrimental impact on when an AMX shareholder receives consideration (i.e. consideration is still paid to an AMX sharesholder no later than one month after that shareholder tenders their shares)
  • Gross Return: 7.3% (IRR >100%)
    • AMX last price = A$0.185; 
    • Deal Consideration = A$0.1985 per AMX share (CEY last price: £0.536 (A$0.993) & 1:5 deal ratio)
    • Currency risk can be hedged. Borrow on CEY is GC
I do not hold a position of employment, directorship, or consultancy with the issuer.
I and/or others I advise hold a material investment in the issuer's securities.

Catalyst

Tender AMX shares. Receive consideration no later than one month post tendering AMX shares.
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