Nautilus slaps down increased offer from Bailey
Nautilus Minerals Ltd has questioned the validity of an increased unsolicited offer for the company from Canada-based algorithmic trader Michael Bailey.
It added its two biggest shareholders had not been contacted by Bailey, nor has the company received a formal bid.
On Friday Bailey said he intended to increase his offer for the undersea explorer by just over 13% to C$270 million (US$275 million) and was seeking board changes.
Bailey said that he had sweetened the terms to C$1.1/share from his original offer of C$0.97/share, despite Nautilus confirming that no formal offer had been received and that more detailed information was required from Bailey.
Bailey said he had overwhelming support for his hostile bid from “significant” existing shareholders and fund managers.
But Nautilus claimed major shareholders Metalloinvest (21%) and Oman-based MB Resources (16.9%) had informed the company they hadn't been contacted by Bailey.
“Furthermore, given the unusual events to date, the board is unable to make any determination regarding the validity of the offer,” Nautilus said today (January 14).
In February 2010, Bailey withdrew a hostile bid for Toronto-based Vaaldiam Resources Ltd where similar questions were raised about his methods. Vaaldiam was eventually sold to original bidder Tiomin Resources Inc.
Bailey said in his statement that the tender offer will not be subject “to due diligence”¦but will be subject to the election of Mr Bailey's nominees to the Nautilus board at the upcoming annual meeting so that Mr Bailey's proposed nominees, if elected, can remove impediments to the company's operation under Papua New Guinea law.” Nautilus's operations are off the PNG coast.
Nautilus suspended work on its flagship Solwara-1 project late last year due to a dispute with the government of PNG, which has an agreement in place to fund 25% of the project.
Last week Bailey claimed he would make Nautilus' former chief scientific adviser, Robert Goodden, interim chief executive should a deal be clinched. A person familiar with the bid said Goodden had yet to commit to the takeover, but would likely support an offer.
Bailey in his statement, claimed to hold 10% of Nautilus shares. Should he receives tenders of 40.1% (which when added to his 10% stake will equal 50.1%), he will demand that the annual meeting is bought forward to allow the election of his directors and the quick closing of the tender offer, he said.