The consideration under the Transaction Agreement had an implied value of $625 million based on the closing price of Genesis shares on ASX on 12 May 2023 of $1.275 (“Genesis Closing Price”).
St Barbara improves terms of the agreement. (Credit: omid roshan on Unsplash)
St Barbara Limited (“St Barbara”) (ASX: SBM) refers to its announcement of 17 April 2023 outlining the terms of the agreement (“Transaction Agreement”) with Genesis Minerals Limited (“Genesis”) (ASX: GMD) in respect of the sale of its Leonora assets
(“Leonora”) for $600 million (at that time), comprising:
• Cash of $370 million;
• 147.8 million shares in Genesis, then valued at $170 million1; and
• An additional 52.2 million shares in Genesis, then valued at $60 million1, contingent upon the Tower Hill Project achieving first production (“Performance Rights”)
The consideration under the Transaction Agreement had an implied value of $625 million based on the closing price of Genesis shares on ASX on 12 May 2023 of $1.275 (“Genesis Closing Price”). On this basis, the net after–tax value to St Barbara under the Transaction Agreement is estimated to be $599 million2.
St Barbara is pleased to advise that Genesis has executed a binding agreement to amend the Transaction Agreement (“Revised Transaction Agreement”) to the effect that:
• Genesis will issue an additional 5 million shares upfront to St Barbara upon completion of the transaction; and
• The 52.2 million Performance Rights will be accelerated and converted into Genesis shares immediately upon completion of the transaction (rather than being contingent upon the commencement of production at Tower Hill), provided that St Barbara shareholders approve the transaction on or before 30 June 2023.
St Barbara will issue a notice of meeting to approve the transaction in the coming days so as to hold the necessary meeting of St Barbara Shareholders before 30 June 2023.
Following this amendment, in consideration for the sale of Leonora, Genesis will pay to St Barbara on completion:
• Cash of $370 million; and
• 205 million shares in Genesis, valued at $261 million based the Genesis Closing Price.
The consideration under this Revised Transaction Agreement had an implied value of $631 million based on the Genesis Closing Price. On this basis, the net after–tax value to St Barbara under the Revised Transaction Agreement is estimated to be $604 million.
The Revised Transaction Agreement will result in St Barbara shareholders collectively having increased upfront economic exposure to ~19.9% of Genesis (on a post–transaction basis). It is anticipated that St Barbara’s shareholding in Genesis will be
substantially, if not fully, distributed to St Barbara shareholders via a return of capital post transaction3.
In addition, under the terms of the Revised Transaction Agreement, Genesis has agreed to pay a cash deposit of $25 million. The deposit will be held in an escrow account and is non–refundable if Genesis shareholders do not approve the transaction at the Genesis shareholder meeting or if St Barbara validly terminates the Agreement (excluding for a St Barbara Superior Proposal4). The funds are otherwise repayable to Genesis. Genesis is not required to pay St Barbara a break fee if the deposit is retained by St Barbara.
Source: Company Press Release