Amended merger sweetens pot for Guyana Goldfields shareholders in deal with Silvercorp
The deal basically sweetens the pot for shareholders of Guyana Goldfields, with the companies saying the increased offer values Guyana Goldfields at C$227 million. The amended agreement also increases the termination fee to C$9 million that Guyana Goldfields would have to pay Silvercorp if the deal is terminated for certain specified reasons.
The companies said they amended the agreement after Guyana Goldfields received an unsolicited all-cash proposal from a third party. The board of directors of Guyana Goldfields last week rejected an all-stock offer from Gran Colombia Gold Corp. (TSX: GCM) and signaled its intention to keep pursuing a merger with Silvercorp.
With the revised offer, each shareholder of Guyana Goldfields shares will receive, for each share held, C$0.25 in cash and 0.1849 of a Silvercorp share. This will mean total consideration of C$1.30 per share, based on the volume-weighted average price for Silvercorp shares during the five trading days ending Thursday, the company announced.
Under the original agreement announced on April 27, Guyana Goldfields shareholders were to receive either C$0.60 in cash or 0.1195 of a Silvercorp common share.
The companies said both boards of directors voted in favor of the amended transaction unanimously. A circular will be mailed to shareholders of Guyana Goldfields in early June, and special meeting and vote on the transaction is planned for June 29.
The companies said Silvercorp now holds 16,549,000 Guyana Goldfields shares, representing 9.48% of all outstanding shares.
After accounting for Silvercorp’s existing shares, the revised cash offer of C$0.25 implies a total cash component of C$39.5 million, and the share consideration of C$1.05 implies a total share component of 29.2 million shares, the companies said. Based on this, existing Guyana Goldfields shareholders would own 14.4% of Silvercorp’s pro forma basic shares following the transaction.
Silvercorp is a Canadian company producing silver, lead and zinc from mines in China. Guyana Goldfields, also based in Canada, is focused on the exploration, development and operation of gold deposits in Guyana, South America. The company’s flagship mine is the Aurora gold mine, which reached commercial production at the start of 2016.