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KWM advises on company takeover

KWM advises on company takeover

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 already owned by CFC.

Firms: King & Wood Mallesons (Cathay Fortune Corporation (CFC); GRT Lawyers (Discovery Metals Limited)

Deal: Joint venture between Cathay Fortune Corporation and China-Africa Development Fund

Area: Corporate

Value: Approximately $830 million

Key players: KWM 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, alongside senior associate Paul Schroder

Deal significance: Under the deal, a joint venture of CFC and the CADFund known as Cathay Fortune Investment Limited will acquire 75 per cent and 25 per cent of Discovery Metals, respectively, for $1.70 a share in cash. CF Investment currently owns 13.7 per cent 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 $830 million and represents a 51 per cent premium to the volume weighted average price of Discovery for the last 30-day trading period and a 42 per cent premium to the $1.20 per share issue price of the institutional equity placement announced on 8 August 2012.

“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,” said Minns.  

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 PRC. CADFund requires approval from the ministry of commerce and the State Administration of Foreign Exchange of the PRC, which is 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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