Rio Tinto will take control of a $2.4bn uranium mine rehabilitation project for its majority-owned subsidiary Energy Resources of Australia (ERA), ending a long-running dispute with minority investors over control of the company and its former mine near Kakadu National Park in the Northern Territory.
That’s after the Takeovers Panel stood by its decision to dismiss protests by two minority shareholders in Energy Resources of Australia, paving the way for Rio to assume full control of the company via ERA’s $880m capital raising.
In September, shareholders Zentree Investments and Packer & Co, which hold 3.04% and 8.82% of the votes in ERA, respectively, sought interim orders from the Takeovers Panel to delay the capital raising.
The shareholders claimed the offer would see Rio’s shareholding increase above the compulsory acquisition threshold of 90%, without an applicable exemption under Chapter 6 of the Corporations Act.
The Takeovers Panel subsequently denied the shareholders’ request, stating that ERA’s independent board committee took appropriate steps to try and mitigate the potential control effect of an equity raise which could see Rio acquire the company.
ERA told the ASX that it will now proceed with its massive capital raising “as soon as possible” after the Takeovers Panel declined to make a declaration of unacceptable circumstances in relation to the proposed entitlement offer.
The heavily discounted entitlement offer, first revealed in August, is to help ERA meet the ballooning cost of the rehabilitation.
It is so large and the outlook for ERA is so poor, that it will almost certainly see majority shareholder Rio Tinto increase its stake in the company from 86.33% to 99.2%.
The Takeovers Panel said it reached “similar conclusions” to the initial panel and was satisfied that ERA’s independent board committee (IBC) had complied with the panel’s guidance on rights issues.
The panel noted that “nothing suggested the IBC had failed to undertake an appropriate process” in relation to the proposed equity raise, and accepted IBC’s view that the equity raise was the only viable option available in the circumstances.