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Allens on largest capital raising

Allens on largest capital raising

ALLENS ARTHUR Robinson worked on the largest ever capital raising by an Australian mining company and the third largest capital raising on the ASX this year in the Newcrest Mining Ltd…

ALLENS ARTHUR Robinson worked on the largest ever capital raising by an Australian mining company and the third largest capital raising on the ASX this year in the Newcrest Mining Ltd accelerated renounceable entitlement offer (AREO).

The firm was the Australian legal adviser to the company on the deal, which involved a capital raising of $2.042 billion by way of a pro rata offer to existing shareholders.

The transaction involved a non-traditional AREO, and included an accelerated offer to Newcrest’s institutional shareholders, another offer to Newcrest’s retail shareholders, and separate bookbuilds in relation to each of the institutional and retail offers.

Newcrest was not able to rely on common exemptions from US securities law requirements due to its large number of US investors.

Blake Dawson Waldron was the Australian adviser to the underwriters, while Skadden, Arps, Slate, Meagher & Flom was the US adviser to Newcrest.

Lead Allens partner on the deal, Greg Bosmans, said instability in global equity markets, and changing conditions in the gold market meant tight execution of the deal was critical to its success.

“The process probably really only started in earnest in mid-July, and then August was really a crunch month. Part of the issue during that process was that there were some ructions in the equity markets. There was a subprime issue that emerged in the US and that was affecting the equity markets worldwide.

“So there was a lot of uncertainty in relation to deal execution for a period there, and it was a case of ‘is it going to proceed or is it not?’. But we needed to put ourselves in the best position to take advantage of the circumstances,” Bosmans said.

The last four weeks of the deal were intense, according to Bosmans, while the planning phase has existed over a longer period.

“Part of the issue in this transaction was that Newcrest has a very significant shareholder base and, in order to ensure the offer could be extended to those investors, there was a significant requirement to ensure that US practice and legal requirements were followed. This meant a whole lot of additional work in terms of disclosure and diligence and those sorts of things in order to ensure that we were able to achieve that,” he said.

Bosmans said that it was unlike most companies that don’t have that size investor base, and that can prepare a relatively straightforward rights issue type prospectus.

“In this case there was a very substantial, few-hundred-page document that was needed to be prepared for US purposes. Then the process of making sure that that tied properly with the Australian side of things was part of the additional challenge,” he said.

As well as Bosmans, the Allens team comprised partner Rob Pick, senior associate Gadi Bloch, and Georgie Fast, Paul Bernath, Martin Hecht, Toby Woods and Romy Weisfelt.

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