Kinbauri supports Orvana takeover

Vancouver – Though just short of a two-thirds share threshold, it appears that Orvana Minerals (ORV-T, ORVMF-O) will clinch a once-hostile takeover of Kinbauri Gold (KNB-V) with both Kinbauri’s president and CEO Vern Rampton and the company’s board of directors now behind the transaction.

“There are no sour grapes,” Rampton says, referring to the sometimes heated exchanges that passed between the two companies over the past four months.

Pursuant to a takeover effort that began in May, 2009, Orvana had set Aug. 17 as the latest deadline for Kinbauri stakeholders to tender their shares. A condition of the 75¢ per share offer, the second Orvana has made after pegging its initial bid at 55¢, was that it receive at least two thirds of Kinbauri’s shares.

Orvana, however, hasn’t quite made it there. As of Aug. 17, 2009, Orvana says it has received 42.7 million or 59.8% of Kinbauri’s shares on a fully diluted basis.

But Orvana, only about 7% off the mark, has said it won’t let the two thirds condition grow into a deal-killer. Instead Orvana said it will waive the condition, buy those shares tendered so far and look to get more.

To that end Orvana is depositing funds to pay for shares already proferred and re-extending the deadline of the 75¢ offer until Aug. 28.

“I think we hope to support (Orvana’s) efforts,” Rampton says signalling a marked change of position for Kinbauri.

Kinbauri first opposed Orvana’s takeover bid at 55¢ a share as it was then in favour of a deal to sell a 45% stake of its Spanish assets, the El Valle/Carles project in northern Spain, to Glen Eagle Resources (GER-V, GERFF-O) for US$32 million. At the time Rampton called the Orvana offer ridiculously low while Orvana countered that Kinbauri’s management was not experienced enough to properly manage development of the El Valle/Carles project.

Kinbauri’s support of the Glen Eagle transaction over Orvana’s all-cash bid also infuriated one of its largest shareholders, Jaguar Financial (JFC-T, JGFCF-O), which went so far as to call for the resignation of Kinbauri’s board of directors. Jaguar doubted Glen Eagle’s financial backing and saw Orvana’s bid as guaranteed cash in comparison.

It wouldn’t matter, however, as the transaction with Glen Eagle fell through after Glen Eagle announced the European consortium of investors it said it had lined up as a source of financing backed out.

To complicate matters, when Kinbauri withdrew from the agreement Glen Eagle said it intended to sue Kinbauri for damages given that it claims to have subsequently arranged a US$35 million financing through a Swiss-based investor called Nicola Torciano and then a US$115 million financing from a Middle Eastern construction company called Midco that, in each case, would have enabled it to buy a stake in Kinbauri’s Spanish assets.

Jaguar later stoked the fire alleging that Glen Eagle’s bank confirmation of Midco’s purported US$115 million balance at Kuwait Financial House (KFH) was bogus. Jaguar says it had legal counsel meet with bank officials at KFH who confirmed the document was not authentic.

Glen Eagle has denied those allegations and says it has reconfirmed the balance, though it has declined several requests for the contact information of Midco officials citing the financier’s desire to maintain a low profile. Glen Eagle also requested officials at Liberty Finanz & Trust – the Swiss-based financial organization created in 2008 that was to hold Torciano’s US$35 million – not be contacted after a call to them by The Northern Miner.

Nonetheless, with the Glen Eagle deal to the wayside, that left Orvana’s 55¢ offer on the table – if only briefly. ATW Gold (ATW-T, ATWGF-O) and Kinbauri soon announced intentions to merge at 1.35 ATW shares for every Kinbauri share.

In reaction to the merger Orvana countered with a sweetened bid at 75¢. Though the bid didn’t win over Kinbauri, it did ease its view of Orvana. Kinbauri told shareholders that it was neither opposed nor in favour of the new offer.

Kinbauri’s fence-sitting, however, frustrated ATW Gold. On the grounds that a condition of the transaction had been that Kinbauri unanimously support the merger, ATW announced it was dropping merger plans with Kinbauri, leaving, once again, Orvana’s offer the only one on the table.

Now, with Orvana having snatched up nearly two thirds of Kinbauri’s fully diluted shares and Kinbauri coming on side, all the sparring for Kinbauri’s assets looks to be have all but come to an end.

Though Rampton says he had hoped to get more for Kinbauri’s assets, he acknowledges that Orvana has played by the rules of the game in its takeover of the company. Furthermore he says he intends to help Orvana contact some of Kinbauri’s shareholders who may be difficult to get a hold of as they have been with the company for over two decades.

Finding them will be a “little bit of a job for me,” he says.

While Rampton says he would’ve liked to have taken Kinbauri’s El Valle/Carles assets through to development, Orvana’s subsequent success in getting shares tendered at 75¢ is “softened by the fact that I am a large Kinbauri shareholder.”