Polo-Caledon merger talks terminated

Merger discussions have been ended between Caledon Resources plc and Polo Resources Ltd after the parties were unable to agree terms owing to market volatility.

“The termination of merger discussions with Polo is a reflection of the difficulties presented by the current market environment,” said Caledon’s managing director, Mark Trevan.

At the same time Caledon has announced the sale of 11 million shares to Polo at an issue price of £0.30/share, an 8% discount to the average price over the last 10-days.

Stephen Bywater, chief executive of GCM Resources, a Polo investment, will be joining the Caledon board. GCM is focused on the development of the Phulbari coal project in Bangladesh.

In late-April, the two parties announced an agreement to consider merging the Australian coking-coal producer Caledon with mining-investment holding company Polo.

The deal would have seen Polo offer 11.4 shares for each share in the Caledon, initially valuing the company at almost £130 million (US$200 million).

Polo also provided Caledon with loan and credit facilities to repay convertible notes that are due later this year and to secure port tonnage allocation. The notes are convertible at any time, and equate to a total of 36 million shares at £0.50/share.
Polo already owns 26.1% of Caledon’s shares, as well as £4.7 million of the convertible notes due in 2010, and £2.5 million of those due in 2013.