BlackGold Natural Resources has announced that it has entered into a sale and purchase agreement (SPA) with MGL Development for the proposed acquisition of the entire issued and paid-up share capital of Tengri Coal and Energy (TEC) for $1 bil via a reverse takeover (RTO).
The SPA follows a non-binding term sheet that was signed for the deal last month.
See: BlackGold to acquire energy construction and mining group in Mongolia via $1 bil RTO deal
The proposed acquisition and RTO will be subject to approval from shareholders at an extraordinary general meeting to be convened at a later date, as well as approval from SGX-ST.
MGL is the sole shareholder of TEC, which owns the entire issued and paid-up share capital of Tengri Petrochemicals (TPL), which holds coal mining licenses Bayan soum, Tuv province, Mongolia. TPL in turn owns the entire issued and paid-up share capital of Tsaidam Energy (Tsaidam Energy), which holds licences for the construction of power plants and energy facilities in Mongolia.
The purchase price of $1 billion shall be adjusted based on an independent valuation of TEC Group and its assets.
New ordinary shares in BlackGold will be issued to MGL to satisfy the purchase price, calculated based on the final ascribed value of BlackGold divided by the number of shares in issue immediately preceding completion. Under the SPA, the indicative ascribed value of BlackGold and its assets is $202.5 million, subject to adjustments based on an independent valuation.
As TEC may be eligible for a mainboard listing on the SGX, BlackGold states it intends to seek a transfer of its listing from the Catalist board to the Mainboard.
BlackGold has also announced that in connection to the transaction, it shall undertake a placement exercise within 21 days of the SPA date to raise up to $5 million. 80% or $4 million of the proceeds will be used to cover professional costs and expenses incurred for the proposed acquisition, as agreed upon by the parties in the SPA.
The remaining 20% or $1 million of proceeds will be used by BlackGold for its own working capital, including payment of outstanding professional fees in connection to the transaction.
In its filing to SGX dated May 28, BlackGold also disclosed that MGL had been introduced to the company via UOB Kay Hian, with BlackGold signing an introducer agreement with the latter. To that end, UOB Kay Hian will be paid a fixed introducer fee of $500,000 and 10% of the placement proceeds. UOB Kay Hian will also be issued and allotted new shares in BlackGold amounting to 4.88% of its market capitalisation as at the completion of the proposed acquisition.
Shares in BlackGold closed flat at 1.7 cents on May 27.
