Takeover Panel application against two major mining companies

Piper Alderman advised Singapore fund, Zentree Investments, a 16% shareholder of ASX Listed Energy Resources of Australia Ltd (ERA), in respect of its response to ERA’s proposed accelerated entitlement offer which was to be underwritten by Rio Tinto Plc (Rio) and had the potential to result in in Rio acquiring voting power of 95% of ERA and being allowed to compulsorily acquire the shares of all the minority shareholders in ERA.

Prior to the offer, ERA had a market capitalisation of approximately $120m and claimed that the $500m was required to fund committed expenses, without which ERA would be insolvent.

Piper Alderman assisted Zentree in seeking to resist the proposed offer, which was believed to deprive shareholders of the opportunities that would arise from the proposed acquisition of control by RIO, including the world class Jabiluka deposit, by applying to the Takeovers Panel for a declaration of unacceptable circumstances.

The Takeovers Panel conducted two sets of proceedings and declared unacceptable circumstances and heavily criticised both Rio Tinto and ERA and ordered significant additional disclosure.