King & Wood Mallesons has advised Shanghai-based private equity firm, Cathay Fortune Corporation (CFC), on its combined off-market takeover with the China-Africa Development Fund (CADFund) to acquire all ordinary shares of Discovery Metals Limited that are not owned by CFC.
Under the deal, a joint venture of CFC and the CADFund known as Cathay Fortune Investment Limited will acquire 75% and 25% of Discovery Metals, respectively, for A$1.70 a share in cash. CF Investment currently owns 13.7% of the ordinary shares of Discovery.
Discovery is an Australian Securities Exchange/Botswana Stock Exchange listed copper exploration and production company focused on the emerging Kalahari Copperbelt in northwest Botswana.
The transaction is valued at approximately A$830 million and represents a 51% premium to the volume weighted average price of Discovery for the last 30 day trading period and a 42% premium to the A$1.20 per share issue price of the institutional equity placement announced on 8 August 2012.
The King & Wood Mallesons Partner Stephen Minns led a cross-border team including Beijing based partner Jin Xiong, Hong Kong based partner David Lam and Sydney based partner Alex Regan and Senior Associate Paul Schroder.
“This is a particularly exciting deal for us because it represents a combined effort across our PRC, Hong Kong and Australia practices. It was originated in Beijing, with acquisition financing being run out of Hong Kong and the takeover in Australia. This is a great example of what the combination between King & Wood and Mallesons can achieve . With Discovery Mineral’s assets and secondary listing in Botswana, it also gives us an opportunity to show case our broader international counsel capability”, said Stephen Minns.
Senior Associate Paul Schroder noted “this is the fifth public takeover we have acted on where the ASX listed target has all its assets in Africa (Sphere, Gold One, Sundance, Kalahari/Extract and now Discovery). This is an area we been focussed on for some time now, and have the deepest track record in the market.”
The Offer will be funded by a term loan facility to be provided by China Development Bank and available liquidity of CFC and CADFund.
CFC and CADFund have received approval from the National Development and Reform Commission of the People’s Republic of China. CADFund requires approval from the Ministry of Commerce and the State Administration of Foreign Exchange of the People’s Republic of China, which are expected to be granted by mid-November.
CFC and CADFund require FIRB approval, which is expected to be granted in late October.
CFC and CADFund will submit applications for approval from the Competition Authority and the Minister of Minerals, Energy and Water Resources of Botswana.
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