Aurelian takeover bid under fire by Internet group
2008-09-03 09:49 ET - News Release
Mr. George Tsiolis of Agoracom reports
AURELIAN RESOURCES INVESTOR COMMUNITY ON AGORACOM REVOLTS AGAINST KINROSS GOLD BID. REGISTERS 1,122,000 PAGE VIEWS
The Aurelian Resources Inc. community on Agoracom has registered over 1,122,000 page views since July 24 from shareholders that overwhelmingly will not tender their shares to the offer made by Kinross Gold Corp.
Most successful Canadian on-line shareholder activism campaign
George Tsiolis, founder of Agoracom, stated: "This is by far the most successful Canadian on-line shareholder activism campaign I have ever seen. In addition to building a massive and highly informed on-line community, this well-orchestrated campaign attracted major business media and blog coverage, took top spot on Yahoo! Buzz (Business) on its first day, and even extended to YouTube. All that remains now is the result. If you are a shareholder of Aurelian Resources Inc., I urge you to read the comments of this group and watch their very compelling YouTube video. For your convenience, we have provided links to them below."
Community sees major deficiencies with Kinross bid
Amongst the many concerns expressed by the Aurelian Agoracom community, the following are most prevalent.
1. Valuation of the bid
Kinross Gold has offered to acquire shares of Aurelian that it does not already own on the basis of 0.317 of a Kinross common share and 0.1429 of a Kinross warrant for each Aurelian share to holders of Aurelian shares and holders of options of Aurelian.
As of the offer announcement reported in Stockwatch on July 24, 2008, the implied value of the offer was $8.20 per share, based on a 20-day volume weighted average price of each company, representing a 63-per-cent premium to Aurelian's 20-day volume weighted average price of $5.02. This attributes a value of 92 cents per Aurelian share to the 0.1429 of a Kinross warrant payable as partial consideration for each Aurelian share under the terms of the offer.
Unfortunately, Kinross shares have fallen by approximately 23.2 per cent to $16 as of Sept. 2, 2008.
At this price, the Kinross offer values Aurelian shares at approximately $5.62 ($16 times .317 equals $5.08) plus (54.4 cents per Aurelian share to the 0.1429 of a Kinross warrant), representing only an 11.95-per-cent premium over Aurelian's 20-day volume weighted average price of $5.02 on July 23, 2008. Investors are asked to confirm this figure with their investment advisers as the Kinross warrants do not currently trade on the Toronto Stock Exchange (TSX) or any exchange. Kinross has only applied to the TSX to list the Kinross warrants to be issued to shareholders in connection with the offer. As such, an exact figure can not be truly ascertained.
Moreover, given the fact the Kinross warrants have an exercise price of $32 per Kinross common share, well above its Sept. 2 closing price of $16, the Aurelian Agoracom community believes this component of the consideration to be virtually worthless, thereby valuing the actual bid at just $5.08 ($16 times 0.317 equals $5.08), representing a mere 1-per-cent premium over Aurelian's 20-day volume weighted average price of $5.02 on July 23, 2008.
In either circumstance, the Aurelian Agoracom community is significantly concerned with the value of the Kinross offer, does not believe it even remotely reflects the true value of Aurelian and, therefore, does not believe it sufficiently warrants tendering of their shares to the Kinross offer.
2. Timing of the bid and expiry date
The board of directors of Aurelian accepted the Kinross offer on July 24, as well as an expiry date of Sept. 3. The Aurelian Agoracom community is concerned as to why the board would agree to an offer during the busiest vacation period of the year, as well as an expiry date shortly after Labour Day, thereby significantly reducing the possibility of a competing proposal.
For example, on Aug. 24, 2008, Q9 Networks Inc. announced an acquisition by CDC Acquisition Corp. at a 38-per-cent premium to its 30-trading day volume weighted average closing price. That transaction has also been approved unanimously by the board of directors of Q9. However, the agreement contains a go-shop provision pursuant to which Q9 has the right to solicit and engage in discussions and negotiations with respect to potential competing proposals through the go-shop period, which ends on Oct. 3, 2008.
The Aurelian Agoracom community questions why the Aurelian board did not insist on a later expiry date and/or a go-shop clause for the purpose of soliciting a competing bid.
3. Granting of stock options to board members days before JV discussions with Kinross
The Aurelian Agoracom community is concerned as to why the board granted more than 2.4 million options to board members shortly before commencing joint-venture discussions with Kinross. The Aurelian Community believes this creates, at the very least, the appearance of impropriety and the strong possibility of a conflict of interest contrary to those of shareholders.
Community asks fellow shareholders to not tender shares
As a result of these and other unresolved major concerns, the Aurelian Agoracom community is asking fellow investors to not tender their shares to the current Kinross offer.
Relevant links Aurelian Agoracom community: Agoracom website
Aurelian Agoracom community video on YouTube: YouTube website
Aurelian Agoracom community coverage archive: Agoracom blog website
