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Gold Fields won’t alter Western Areas bid Posted: Thu, 14 Sep 2006 [miningmx.com] -- GOLD Fields dismissed suggestions it could raise or change its share-based offer to Western Areas shareholders. “Why should we?” said Nick Holland, chief financial officer for Gold Fields. “We are offering Western Areas shareholders an exit strategy. They should realise what they’ve got.” These comments follow an article by South African daily newspaper, Business Report, quoting Bernard Swanepoel, Harmony Gold CEO, as saying there would not be many takers for Gold Fields current offer. On September 11, Gold Fields announced a proposal to pay 35 of its shares for every 100 Western Areas shares held. The imputed value to Western Areas is calculated to be about R52/share. Western Areas owns 50% of the 29.2 million oz South Deep mine, south west of Johannesburg. Gold Fields simultaneously offered a predominantly cash offer of $1.52bn to Barrick Gold, the Canadian producer that owns the other half of South Deep. It so happens, however, that the fall in the gold price has placed pressure on Gold Fields’ share price which is trading 4.37% lower than its R134.90/share on the day of the announcement. It’s also worth noting that Johannesburg’s gold index is 8.9% weaker over the same period. In an interview with Miningmx, Swanepoel said it would have served Gold Fields better to have offered cash to Western Areas shareholders. “There was no price agreed, only a ratio. So every morning we have to see where we are,” he said. “But we’ll reserve our position until the offer closes which is in about 90 days time. It’s still very premature to say what we’ll do,” he said. Piet Viljoen, chief investment officer at Re:Cm, a fund management company that owns 5% of Western Areas, said the company wanted cash. “I think Gold Fields will want to speak to us at some time. Maybe they won’t. “Any rational investor would be of a similar mind and want a cash offer. If it’s a paper offer, they you want a premium.” Viljoen said Re:Cm was faced with swapping a high quality asset in Western Areas for a lower quality asset in Gold Fields. “You don’t find many large gold reserves around like Western Areas,” he said. But Holland said Gold Fields’ paper was “as good as cash”. It was highly liquid and the shares could therefore be easily traded in for cash. In contrast “Western Areas is a lobster pot,” said Holland. And yet it appears as if Re:CM and Harmony Gold may consider remaining shareholders in Western Areas which would then not be delisted from the JSE as initially thought. “Yes, we could consider that option,” said Viljoen. Swanepoel even raised the prospect of increasing his company’s 29% stake in Western Areas. Combined, Harmony and Re:Cm own 34% of Western Areas.Free news alerts: click here to subscribe
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