AuIron Energy Ld
24 July 2003
AUIRON ENERGY LIMITED
24 July 2003
ACQUISITION OF YARRABEE COAL COMPANY PTY LTD
AuIron Energy Limited ('the Company') has today lodged with the Australian Stock
Exchange ('ASX') the following announcement.
Announcements are also available from:
The Company's website: www.auironenergy.com.au
The ASX website: www.asx.com.au
On 17 June 2003 AuIron Energy Limited ('AuIron') announced that it had entered
into a definitive agreement to acquire the Yarrabee Coal Company Pty Ltd ('YCC')
(the 'Acquisition') from Resource Management & Mining Pty Ltd ('RMM').
Approval of AuIron Shareholders is required under various provisions of the
Corporations Act and Australian Stock Exchange Listing Rules before the Company
can complete the Acquisition. Accordingly, a meeting of Shareholders will be
convened for that purpose and it is anticipated that the meeting will be held on
or about 19 September 2003.
The draft Notice of Meeting and Explanatory Memorandum including a draft
Independent Expert's (IE) Report dated 21 July 2003 (the 'Documents') have been
submitted to ASIC and the ASX for review. Final versions will be distributed to
Shareholders and be available on the Company's website (www.auironenergy.com.au)
as soon as practicable once regulatory approvals are received.
Shareholders are urged to read the Documents carefully as they set out detailed
material to enable an informed decision on the merits of the proposed
Acquisition to be made, and in particular that:
• the Directors of AuIron consider that the Acquisition is in the
best interests of Shareholders and meets the investment criteria previously
advised to Shareholders and accordingly, recommend that Shareholders vote in
favour of the Acquisition;
• the IE has assessed the Acquisition as fair and reasonable in
their draft report. Full details will be available in the Documents to be
distributed to Shareholders. Each of AuIron's and YCC's assets were included in
the IE's assessment; and
• the Acquisition provides an operating asset and cash flow and
has been structured to provide an incentive to grow AuIron's share price.
An alternative proposal has been suggested by Westchester Financial Services Pty
Limited which we understand has been circulated to Shareholders by Westchester.
It involves inter alia, election of a Mr Ryan and a Mr Blanks to the Board of
AuIron, and a move to implement the following strategy:
• that the Company implements a buy-back offer to each
Shareholder for 80% of their Shares at 6 cents per share; and
• the remaining cash is applied in the pursuit of superior
returns on funds employed (after corporate and management costs) through risk
managed investments in resource sector project interests, royalties and listed
or unlisted securities. Mr Ryan states this would involve a strategy of
pursuing higher risk resources sector investments with much higher reward
potential than the current Board's strategy. Their strategy will focus more on
potential rewards than actual returns.
Mr Ryan and Mr Blanks have not provided any meaningful or comprehensive details
how the strategy of pursuing superior returns could be achieved nor whether they
have followed this type of investment strategy with success previously.
The Board considered this proposal in finalising its recommendations regarding
the Acquisition and believes that the proposal from Mr Ryan and Mr Blanks would
not be in the best interests of the Company and its Shareholders. Details of
the proposal and of Mr Ryan and Mr Blanks, as provided by Mr Ryan, are also set
out in the Documents to be sent to Shareholders.
At AuIron Energy Limited:
Jon Parker Joe Fontana
Managing Director CFO & Company Secretary
Telephone: 61 (0)2 9357 2044
Facsimile: 61 (0)2 9368 1313
This information is provided by RNS
The company news service from the London Stock Exchange