Leaked email correspondence between the chairmen of gold miners St Barbara and Silver Lake shows attempts to discuss a deal in September were brushed off.
St Barbara’s new chairman, Kerry Gleeson, told shareholders last week that Silver Lake’s seemingly more lucrative offer was “unacceptably conditional” at a time when her company needed to complete a transaction before June 30 to avoid breaching debt covenants.
St Barbara had told the market in July that it was in talks with Genesis, and on September 29 said it had also held talks with neighbouring miner Red5. “Instead, Silver Lake was clear that it wanted to do fundamental, bottom-up due diligence on St Barbara first and then decide on the price it might be willing to pay for St Barbara, if it was willing to make an offer at all.
Covenants on debt will be breached if St Barbara shareholders do not meet and vote to accept the Genesis offer before June 30. St Barbara directors have pointed to the covenant risk when explaining why they prefer the certainty of the Genesis offer and why they feel there is no sufficient time to entertain a rival due diligence process.
“However, as the St Barbara board [have] not given access for Silver Lake to do due diligence, how do shareholders determine just what that value is and whether the regional consolidation is the best alternative?
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