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St Barbara to Acquire Atlantic in Friendly Offer for C$802 Million

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St Barbara to Acquire Atlantic in Friendly Offer for C$802 Million






Atlantic Gold Corporation (TSX-V: AGB)  is pleased to announce that it has entered into a definitive arrangement agreement with St Barbara Ltd. (ASX: SBM), signed on May 14, 2019, pursuant to which St Barbara will acquire 100% of all issued and outstanding shares of Atlantic by way of Plan of Arrangement. Under the terms of the Transaction, Atlantic shareholders will receive C$2.90 in cash per Atlantic share held plus shares in a company  that holds Atlantic’s interests in Velocity Minerals Ltd. (TSX-V: VLC), which will be distributed to Atlantic shareholders on a pro-rata basis following completion of the Transaction.


The C$2.90 per share cash consideration implies a total equity value for Atlantic of approximately C$7221 million and a total enterprise value of C$8022 million. SpinCo implies additional consideration of approximately C$12 million to Atlantic shareholders, or approximately C$0.05 per Atlantic share, for total cash plus SpinCo consideration of approximately C$2.95 per share. The C$2.95 per share offer represents a 41.1% premium to the closing price of Atlantic shares on the TSX Venture Exchange  on May 14, 2019 and a 40.8% premium to the volume weighted average price  of Atlantic shares over the last 30 trading days. 


Following completion of the Transaction, SpinCo intends to raise funds via private placement and apply for a listing on the TSX-V.


The cash offer is not subject to a financing condition. St Barbara intends to raise A$490 million through a concurrent underwritten accelerated non-renounceable entitlement to partly fund the Transaction. The balance will be funded via St Barbara’s existing cash reserves. St Barbara has also secured a new committed A$200 million three-year corporate facility with Westpac Banking Corporation  to support the combined company. For more information, see St Barbara press release as posted on its website:


The Transaction is an arms length transaction.  No finder’s fees are payable in connection with the Transaction.


Benefits of the Transaction


Benefits of the Transaction for Atlantic shareholders include:


  • Immediate and significant premium of approximately 41.1% to the closing price of Atlantic shares on May 14, 2019, and approximately 40.8% based on the 30-day VWAP
  • Cash offer is not subject to a financing condition
  • Strong deal certainty with support agreements entered into with shareholders of Atlantic owning approximately 32% of Atlantic shares
  • Through SpinCo, Atlantic shareholders will maintain exposure to Velocity’s Rozino Project in Bulgaria, which Atlantic believes has many similar characteristics to its Moose River Consolidated Mine in Nova Scotia


Atlantic Chairman & Chief Executive Officer, Steven Dean, said: “St Barbara’s C$2.90 cash per share offer delivers an immediate and attractive premium to our shareholders. It not only recognizes the value of our current plan for the MRC Mine, but rewards shareholders for the future growth and exploration potential that defines MRC as a truly world class asset. In addition to the cash consideration, SpinCo provides Atlantic shareholders with ongoing exposure to the Rozino Project which we believe has strong value potential. Our team has done a great job of creating value for shareholders and we are very proud of the high-quality gold mine that we have built in Nova Scotia and St Barbara shares this view.”


Board Support and Voting Agreements


The directors of Atlantic based on the recommendation of a special committee of independent directors of Atlantic  have determined that the Transaction is in the best interest of Atlantic securityholders, have unanimously approved the Arrangement Agreement and have recommended that Atlantic securityholders vote in favour of the Transaction. Directors and officers of Atlantic, who control 32% of the outstanding shares, have entered into a lock-up agreement to vote all shares they hold in favour of the Transaction.


Terms of the Transaction


The Arrangement Agreement includes customary deal protection provisions including a non-solicitation clause, notification rights and a right to match in the event of a superior proposal, as well as a C$25 million reciprocal termination fee payable in certain circumstances, including being payable by Atlantic to St Barbara in order to enter into a superior transaction and by St Barbara to Atlantic if St Barbara does not have sufficient funds to complete.


The Transaction will be effected by way of a plan of arrangement pursuant to the Business Corporations Act (British Columbia)  and is subject to customary closing conditions precedent for a transaction of this nature, including:


  • obtaining interim and final court orders from the Supreme Court of British Columbia;
  • obtaining key regulatory approvals including approval of the TSX-V;
  • Atlantic shareholder approval of the Transaction (at least 66⅔% of the votes cast by all Atlantic Gold shareholders, at least 66⅔% of the votes cast by all Atlantic Gold securityholders, and a simple majority of the votes cast by all shareholders excluding certain interested or related parties, in all cases by shareholders present in person or represented by proxy at the meeting as defined by Multilateral Instrument 61-101);
  • there is no legal action or proceeding against Atlantic that is reasonably likely to prohibit or delay consummation of the Transaction;
  • no material adverse change occurring in relation to Atlantic; and
  • all covenants, representations and warranties of both St Barbara and Atlantic have been satisfied.


The holders of all Atlantic options will receive cash consideration equal to C$2.90 per share less the exercise price of each option.


Completion is anticipated to occur in July 2019.


Financial and Legal Advisors


Atlantic has retained Canaccord Genuity and National Bank Financial as financial advisors, Blake, Cassels & Graydon LLP as Canadian legal counsel, Herbert Smith Freehills as Australian legal counsel, and Paul, Weiss, Rifkind, Wharton & Garrison LLP as U.S. counsel.


National Bank Financial Inc. has provided an opinion to the Atlantic board of directors and the Special Committee stating that, and based upon and subject to the assumptions, limitations, and qualifications set forth therein, the consideration offered pursuant to the Transaction is fair, from a financial point of view, to Atlantic shareholders.


About Atlantic:


Atlantic is a well-financed, growth-oriented gold development group with a long-term strategy to build a mid-tier gold production company focused on manageable, executable projects in mining-friendly jurisdictions. Atlantic is focused on growing gold production in Nova Scotia beginning with its MRC phase one open-pit gold mine which declared commercial production in March 2018, and its phase two Life of Mine Expansion at industry lowest decile cash and all-in-sustaining-costs (as stated in the Company’s news releases dated January 16, 2019 and January 29, 2018). Atlantic is committed to the highest standards of environmental and social responsibility and continually invests in people and technology to manage risks, maximize outcomes and returns to all stakeholders.

Posted May 15, 2019

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