Take-over offer for Sovereign Gold Mines

Press, 13 July 1985, Page 21

Take-over offer for Sovereign Gold Mines

A take-over offer has been made for Sovereign Gold Mines, Ltd, the Greymouth gold miner that' was placed in receivership in July last year. The offer, from a recently formed West Coast retail company, Westside Traders, Ltd, is 5c for each 25c Sovereign share which is not held by the vendors — that is, the shares issued to the founders of the company in return for assets. Trading was suspended in Sovereign Gold Mines’ shares on July 13, last year, after the company had been placed in receivership earlier in the month by the debenture holders, ANZ Banking Group, Ltd, and Barclays NZ, Ltd. The debentures related to plant purchases of about $1 million. Sovereign’s ordinary shares last traded at 6c a share, and between listing in July, 1983, and suspension in 1984, the high was 25c and the low sc. The offer is for 100 per cent of the ordinary shares (excluding the vendor shares) and is conditional upon a 51 per cent acceptance, with a minimum 25 per cent acceptance being stated by Westside Traders. No offer is being made for Sovereign’s options. The receivers are Messrs G. W. Cox and O. W. Pitcaithly, Christchurch chartered accountants in Deloitte, Haskins and Sells. They said that they had received the notice of take-over yesterday. They recommended that shareholders do not sell their shares pending further reports and the receipt of the offer documents from Westside Traders. “The only significant unusual condition of the offer is

that shareholders accepting the offer will be asked to give Westside Traders power of attorney only for the purpose of giving Westside power to vote on the accepted Sovereign shares before the offer becomes unconditional," said the receivers. A statement on the Westside Traders’ take-over scheme, and the receivership, finances, results, and prospects of Sovereign would be made by the receivers and mailed to shareholders at the same time as the take-over documents were sent, they said. The financial details of Sovereign’s results in the year to June 30, its first full year of receivership, had been given to the directors to enable them to make a recommendation to shareholders on the Westside offer. “The Companies Act compels the directors to make such a recommendation,” they said. Sovereign traded at a loss of ?37,013 in the six months to December 31, 1984 (as announced on January 24), before depreciation. It earned a profit of $lB,OOO in the three months to March 31, and showed a loss of $1154 in the final three months to June 30. The results would be commented on extensively in the receivers’ statement to shareholders, they said. The receivers said they had items of Sovereign’s office furniture and equipment, valued at $12,421, returned to them by Messrs P. A. HydeHarris and K. C. Hunt, two Sovereign directors, after legal actions, out of a total value of $24,080. “The receivers will now pursue the physical recovery of the remaining items.” Other court actions initiated by the receivers were pending, they said. Westside was formed earlier this year by a merger of Smith Bros Appliances, Ltd, in both Hokitika and Westport, and Roys Furnishings, Ltd, in Greymouth. In a statement to Sovereign's shareholders, the chairman of Westside Traders, Mr S. G. Smith, said his company believed that the reinvestment of cash received at prevailing interest rates would provide them with a return far m excess of any present or immediately foreseeable return from Sovereign.