Mining firm chooses administration over takeover in ‘UK first’

A British mining firm is waiting to hear how its operations will continue after opting to fall into administration rather than accept a takeover bid from a minority shareholder in what is thought to be a UK first.

Asa Resource, which owns nickel, diamond and copper mines across sub-Saharan African but is listed on the Aim stock exchange and headquartered in London, appointed Duff & Phelps as administrators on July 30.
After Asa’s capital reserves ran dry, they received a $35.5 million (£27.7 million) takeover bid from Rich Pro Investments (RPI), a Chinese investment vehicle which owns a 4 per cent stake in the mining firm, on July 12.

Though the price offered put a 65 per cent markup on Asa’s share trading price, RPI says the miner failed to enter a conversation and opted instead to hand itself over to administrators.

The UK’s Takeover Panel has ruled that the company is not in an offer period as insolvency laws have taken precedence. It is widely reported that this is the first time a company has gone into administration despite receiving a takeover bid: normally, companies would accept any offer - even if too low - in order to protect shareholders’ interests.

Though RPI is now permitted to abandon its bid under Takeover Panel rules, the investor has told Duff & Phelps it is still keen to buy Asa, and has tabled a $40 million loan to keep the mining firm running on the condition that its board is reinstated.

Investors have until August 29 to accept RPI’s offer, which has the firm backing of 38 per cent of Asa’s other shareholders, with no other barrier to the deal other than the presence of administrators.

RPI has said that the incident could set “a dangerous precedent whereby a board can block an offer… ahead of the interests of shareholders.”

Asa Resource Group plc in administration
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