Mercantile's takeover bid for BRL continues to remain valid despite rejection by company's general meeting

Bauxite Resources Limited has received advice from legal counsellor that the rejection of the proportional takeover bid made by Mercantile OFM Pty Ltd (Mercantile) at the Company’s general meeting held on 23 March 2018 will not be applicable to the Mercantile bid.

The board has accepted this advice and, as such, has resolved that Mercantile’s bid remains valid notwithstanding the outcome of the resolutions considered at the General Meeting. Company Shareholders who accept Mercantile’s offer under the bid will have their remaining 50% shareholding continue to trade on the ASX under the new ASX share code BAUE.

BRL’s directors however recommended that the shareholders should reject the offer. They argued that the offer is for only 50% of the shareholding and less than BDO’s preferred value.  If Mercantile wins the bid for control of BRL, shareholders will still be left with 50% of their shareholding but are likely to have little or no capacity to influence the future direction of the Company.

They are also concerned over the fact that Mercantile would effectively liquidate the assets of the company and exit all the mining projects.

BRL’s current board and management are willing to continue with the combined Bauxite and Silica strategy that the company has been undertaking which has the potential for value accretion over time.

They think the offer deprives the Company of the potential for an alternative opportunity and if the shareholders accept the offer, they will not have the benefit of any subsequent higher offer from any third party or benefit from any future growth of the Company. The BRL directors and their associates, who control approximately 27.8% of BRL’s shares on issue, have reaffirmed that they intend to REJECT the Offer.