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: 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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    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.

    Messages


    SubjectOffer Close Extended to 10 March
    Entry02/26/2014 01:19 AM
    Membervalue_31
    http://www.asx.com.au/asxpdf/20140226/pdf/42n0bcd63d8xbl.pdf

    SubjectRE: RE: Offer Close Extended to 10 March
    Entry03/02/2014 09:17 AM
    Membervalue_31
    The spread has come in a bit and is just over A$0.011 currently (using Friday close).  I pay 15bps commission on the Australian line (AMX), 5bps on the London line (CEY) and 25bps borrow cost on CEY.  After commission and borrow cost the gross spread is approximately 5.6%.  
     
    There is no deal risk in this trade so you earn 5.6% and receive consideration one month after tendering shares.  I continue to think ~90% annualized isn't a bad place to risklessly park some capital for a month.  

    SubjectMerger Consideration Coming Sooner Than Expected
    Entry03/05/2014 10:23 AM
    Membervalue_31
    • CEY has applied to have (new) AMX merger consideration shares listed on LSE
    • AMX shareholders that tendered on or before 28 February will receive consideration by 7 March (sooner than the 1 month maximum allowable time per above)
    • Additional tranches of shares will be listed (likely in blocks) as AMX shareholders tender
    CEY release: http://www.centamin.com/centamin/media/news/application-for-listing-of-ordinary-shares

    SubjectRE: Merger Consideration Coming Sooner Than Expect
    Entry04/26/2014 02:29 AM
    Membervalue_31
    We received shares electronically and did not have that problem.  We have already unwound / collapsed the trade. 
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