Bauxite Resources wants predator Mercantile Investment to make shareholders an offer for the whole company, instead of trying to act as a “liquidator” by taking only half.

“The board would like to see them make a full takeover bid for the company because they are sort of sneaking up,” Bauxite (ASX:BAU) chief Sam Middlemas told Stockhead.

The comments come after Mercantile, the investment firm of legendary corporate raider Sir Ron Brierley, told investors it was again extending its offer — this time to April 30, from February 28.

Shares closed up 3.3 per cent at 6.2c on Monday.

Mercantile has so far gained control of 15 per cent of Bauxite Resources, which Mr Middlemas says was bought “entirely on market”.

“There’s about 1 million shares that have tentatively accepted their offer,” he said. “1 million shares is less than 0.5 of a per cent of the issued capital. They are actually buying shares on market.”

BAU shares over the past six months.
BAU shares over the past six months.

Mercantile is only after 50 per cent of Bauxite’s shares.

Independent expert, BDO Corporate Finance, previously determined that Mercantile’s increased offer of 11c per share was fair and reasonable compared to the initial 9c-per-share offer.

“But it’s only fair and reasonable for those shares that they’re taking up,” Mr Middlemas said.

“So if shareholders accept the bid for half their shares, if these guys come in and take all the cash out of the company, they might only get half for the balance of their shares. We don’t know what they’re going to do, they haven’t made any contact with the company.”

The suitor has its eye on Bauxite’s $16.1 million in cash reserves.

Mercantile has said if its 50 per cent takeover succeeds, it will immediately pay shareholders 6c a share, terminate a joint venture with HD Mining & Investment, and stop all exploration activities.

It also plans to sell off all assets and pay the proceeds to shareholders once debts have been cleared.

Bauxite said in its most recent supplementary bidder’s statement that Mercantile intends to “effectively liquidate the company”.

Featured Companies

You might be interested in