Perilya and CBH Merger

Perilya has announced on 26 March 2008 a proposed transaction to merge with CBH Resources to create a globally significant zinc and lead producer.

The proposed merger is a logical development that will unify ownership of the major Broken Hill deposits for the very first time.

The transaction is expected to deliver significant benefits to shareholders of both Perilya and CBH Resources. Common ownership of the Broken Hill assets will generate material operational efficiencies through the optimisation of operating assets and accelerated development of new ore sources.

The company’s primary commodity focus will continue to be lead and zinc at Broken Hill, Endeavour and Flinders, with attractive exposures to gold through the Hera deposit and copper through the Panorama project and Mt Oxide deposit.  Perilya will not acquire certain exploration assets of CBH Resources including Mineral Hill, Sorby Hills and Constance Range .

The merged group will have the scale and financial strength to accelerate the development of existing growth opportunities and pursue further opportunities as they arise.

This proposal is the result of a rigorous due diligence process by your company and has been carefully evaluated by your Board of Directors. The Board has a high level of confidence in the delivery of the operational efficiencies that have been identified. The realisation of these efficiencies will improve the company’s competitive position.

Perilya Chairman, Patrick O’Connor, will become Chairman of the combined group. Chief Executive Officer of CBH Resources, Stephen Dennis will become the combined group’s Managing Director. Len Jubber, the current Chief Executive Officer of Perilya will not take up a place on the Board of the combined group. 

It is intended that the proposed transaction be undertaken by way of a scheme of arrangement under which CBH Resource shareholders will be offered one Perilya share for every three CBH Resources shares and one Perilya option for every 20 CBH Resources shares. The options will have an exercise price of $2.00 and expire on 31 December 2010.  Perilya intends to apply to ASX for quotation of the options. Holders of CBH convertible notes will receive Perilya convertible notes on terms that are substantially equivalent to the existing CBH Note terms. The convertible notes will be subject to a scheme of arrangement and if approved the notes will be listed for quotation on ASX. 

CBH shareholders will also retain an interest in certain pre-development assets held by CBH including Mineral Hill, Sorby Hills and Constance Range, which will be separated into a new company, Kimberley Metals Limited (“Kimberley Metals”), and its shares will be distributed to CBH shareholders by way of capital reduction. Shares in Kimberley Metals, are expected to be distributed on the basis of approximately 1 Kimberley Metals share for each 9.2 CBH shares.

Perilya expects to issue approximately 281 million shares and approximately 42 million options to CBH Resources shareholders. Immediately following completion of the proposed merger, Perilya shareholders will own approximately 41% of the combined group.

The offer by Perilya values CBH Resources at approximately $294 million on an equity value basis and approximately $333 million on an enterprise value basis. 

The transaction is subject to a number of conditions, including CBH Resources shareholder and noteholder approval and Court approval. Subject to satisfaction of the conditions, the proposed merger is expected to be implemented in early July 2008. The proposed merger has been unanimously recommended by the Board of CBH Resources in the absence of a superior proposal.

Your Board of Directors has a very strong belief in the future of the new, merged company. We are confident that the combined entity will be a stronger, more diverse company with the scale and skill base to continue deliver significant value to shareholders.

We will continue to keep you informed of significant developments with regard to this initiative via this web page.

Click here for further details of the proposed transaction detailed in our ASX announcement.

Click here to view the Perilya and CBH Investor Presentation. 

CBH Resources Limited (ASX Code : CBH)

Click here to visit CBH Resources Limited website.