Coppermoly Limited (ASX: COY): The Underwriter
I last wrote about Coppermoly on 4 July 2013. The Company had just announced that it was acquiring Barrick’s interest in its PNG projects, and that Jelsh Holdings Pty Ltd has agreed to underwrite a Rights Issue to raise approximately $2 million at a price of $0.045 per share. Read this article here.
Jelsh Holdings Pty Ltd is a recently formed company with a single share held by WXH Holdings, which was registered in Hong Kong on 27 May 2013. The sole director is Dr Wanfu Huang.
The plot has since thickened. On 26 July 2013 the Takeovers Panel received an application seeking cancellation of the Rights Issue currently underway.
The applicant is Yeaman Nominees Pty Ltd, a company associated with Mr Stan Yeaman, a significant shareholder of the Company. The basic argument is that the Rights Issue is priced to minimise participation by shareholders and thus allow Jelsh Holdings to gain effective control of the Company. Supporting arguments are that the Company has made no effort to mitigate any control effect and has minimised disclosure in the Rights Issue prospectus.
Since the announcement of the Rights Issue WXH Holdings, Jelsh Holdings Pty Ltd, Dr Wanfu Huang and Xiaoyi Shen (the “Related Entities”) have a relevant interest in 12.057% of Coppermoly. The shares were acquired from a Canadian company at a price of $0.045, the same price as the rights issue. These shares had been “on the market” for quite some time, in fact they had been offered to me a couple of months back.
I suspect that there has been a very small take-up of the Rights Issue at $0.045, given the company has been trading in the $0.03 to $0.035 range since announcement of the issue. The Related Entities could potentially take their shareholding up as high as 26.6%, which would probably represent effective control.
The Takeovers Panel has ordered Coppermoly not to issue any shares under the Rights Issue and to hold any funds received in trust for two months or until the Panel makes a determination. This could throw into doubt the Barrick deal and even the underwriting.
It is difficult to predict the outcome of the Panel’s consideration and, further, whether a thumbs up or down would be beneficial to shareholders.
Disclosure: Market Capital holds securities in Coppermoly Ltd as at the date of publication of this article.