An interim $1.2 to $1.5 million fundraising is planned for the Chatham Rise project as a prelude to listing it on an offshore stock exchange.
The interim financing involves private placements to suitably qualified investors, and a share purchase plan with any shortfall tendered for. Further details will be announced by Friday 29 October.
The funds will be used for working capital, to finance the initial steps of the year-two work programme and fund costs relating to the overseas stock exchange listing. The listing process is expected to take six months with a present target date of early May 2011.
The two companies that hold the Chatham Rise Joint Venture are listed in New Zealand. Widespread Energy Limited (with a 90% interest) is listed on the smaller NZAX market and Widespread Portfolios Limited (with a 10% interest) on the main board NZSX market. Both are thinly traded, because they are small and operate in a sector (mining and mineral exploration) that is scarcely researched and attracts few local investors.
Further, there are no NZX listed fertiliser companies, therefore no comparable stocks, and therefore little point (despite its present $20.9 million independent valuation) in listing the project on the local market.
On overseas markets the activities of minerals and fertiliser sector companies are better understood, regularly researched and form a legitimate part of many investor’s portfolios.
These factors have lead the Boards of Widespread Energy and Widespread Portfolios to conclude the interests of both groups of shareholders would be far better served if the Chatham Rise project were to be restructured with a view to a new listing in an overseas share market.
The markets under consideration are the ASX (Australia), HKEx (Hong Kong) and TSX.V (Canada). No final decision has been made but it appears the lack of local depth and investor interest in projects of this nature has made the decision to list offshore inevitable.
The current thinking of the two Boards is Widespread Energy could become a dedicated vehicle for the Chatham Rise Project prior to an offshore listing occurring. This would likely mean transferring other Widespread Energy investments and issuing shares to Widespread Portfolios so Widespread Energy then holds 100% of the Chatham Rise Project. The benefits from this approach are Widespread Energy would be singularly focussed for taking to an offshore market to raise capital and a New Zealand domiciled and listed company would remain a significant shareholder.
If a restructuring did occur in the above manner a number of approvals would be required under the Takeovers Code, NZX Listing Rules and from Crown Minerals. Independent adviser reports would also be necessary. Therefore all shareholders would receive significant information and the opportunity to express their views before any such restructuring was implemented.