Bidding war over Guyana Goldfields commences

A bidding war has commenced over who will own Guyana Goldfields, after an unnamed new company made a “superior offer” to the one that had been agreed upon with Silvercorp, leading to Silvercorp being given a deadline to match the offer or lose the deal.
This was communicated by a press statement on Wednesday, in which Goldfields announced the terms of the new offer and the fact that they have postponed the Annual General Meeting, when they were originally supposed to confirm their agreement to sell to Silvercorp. According to Goldfields, this new, foreign-based company wants to acquire all issued and outstanding common shares it does not already own.
Pursuant to the terms of the new offer, the company’s shareholders would receive cash consideration of C$1.85 for each common share, valuing Guyana Goldfields at approximately C$323 million.
“The New Offeror has also agreed to provide the Company with a US$30 million secured loan facility to finance ongoing operations of the Aurora Gold Mine and to fund other liquidity needs of the company (the “New Facility”).
“Except for the amount of the New Facility, the loan agreement proposed to be entered into between the company and a wholly-owned subsidiary of the New Offeror is substantially similar to the loan agreement between the company and Silvercorp dated April 26, 2020 (the “Silvercorp Loan Agreement”).
This is an improvement on the Goldfield’s agreement with Silvercorp, since that agreement had included up to US$15 million in interim loans. This money was supposed to go to various corporate expenses, as well as their underground mine.
According to Goldfields, the new offer in fact is a 35 per cent premium on the implied value of Silvercorp’s proposal.
The press statement added that commensurate with the increase in consideration, the proposed arrangement agreement with the new offeror provides for an increase in the termination fee to C$11.3 million, which is payable by the company to the new offeror in certain circumstances.
“The proposed arrangement agreement with the new offeror also includes a reverse termination fee in the amount of C$11.3 million, which is payable by the new offeror to the company in certain other circumstances,” Goldfields stated.
In accordance with the Silvercorp Agreement, the company said it has notified Silvercorp that it considers the new offer to be a superior proposal and “that the five business day matching period has commenced , during which Silvercorp has the right, but not the obligation, to propose to amend the terms of the Silvercorp Arrangement Agreement in order for the New Offer to cease to be a Superior Proposal (the “Match Right”).”
According to Goldfields, this matching period expires on June 10, 2020 at 16:30h.
Goldfields noted that if Silvercorp does not use the matching period to better its offer, Goldfields will enter into an agreement with the new company. In the meantime, they noted that they will be taking steps to postpone the June 29 meeting that would have confirmed Silvercorp’s agreement with them.
This is the second company that has tried to get Goldfields, which has already commenced laying off staff, to abandon its agreement to sell to Silvercorp. Last month, Gran Colombia Gold Corp had made a pitch to Goldfields by proposing to buy all its issued shares.
Gran Colombia had not hesitated to call its offer a superior one to Silvercorp. However, Guyana Goldfields subsequently announced that its board of directors, after careful consideration and consultation with its financial and legal advisors, had unanimously determined to reject the unsolicited proposal announced by Gran Colombia Gold Corp.