TORONTO, Aug. 14, 2019 /CNW/ - Cobalt 27 Capital Corp.
(TSXV: KBLT) (OTCQX: CBLLF) (FRA: 270) ("Cobalt 27" or the
"Company") today announces it has filed a management
information circular (the "Circular") for the annual general
and special meeting of shareholders of the Company to be held in
connection with the proposed acquisition of Cobalt 27 by Pala
Investments Limited ("Pala") by way of a plan of arrangement
(the "Arrangement"). Under the Arrangement, Pala would
indirectly acquire 100% of Cobalt 27's issued and outstanding
common shares (other than the approximately 19% that Pala already
owns) for C$5.75 per common share
(the "Consideration"), comprised of C$3.57 in cash plus one share of a newly listed
company, Nickel 28 Capital Corp. ("Nickel 28"), valued at
C$2.18. Upon successful closing of
the transaction, Nickel 28 is expected to be listed on the TSX
Venture Exchange ("TSXV") under the symbol 'NKL'.
The mailing procedures for the Circular and related materials
has commenced and shareholders of Cobalt 27 should receive them
shortly. An electronic copy of the Circular is available on the
Company's website at https://www.cobalt27.com/investors/financials/
and on SEDAR under Cobalt 27's profile at www.sedar.com. Cobalt 27
encourages shareholders to read the Circular in detail.
The Cobalt 27 Special Committee and Board of Directors
UNANIMOUSLY recommend that you vote FOR the Arrangement. Your vote
is IMPORTANT to the success of this transaction.
Reasons for and Benefits of the Arrangement
Significant Premium to Cobalt 27 Shareholders: The
Consideration represents a significant premium of 66% to the Cobalt
27 share price, based on the closing price on the TSXV of the
Cobalt 27 shares on June 17, 2019,
the last trading day prior to the announcement of the Arrangement.
The Consideration also represents a substantial premium of 46% to
the volume weighted average price of the Cobalt 27 shares on the
TSXV for the 20-day period ending on June
17, 2019. Additionally, the Consideration represents a
premium of 41% to the volume weighted average price of
the Cobalt 27 shares on the TSXV between January 2, 2019 and June
17, 2019.
Significant Cash Component Delivers Immediate Liquidity and
Value Certainty in a Volatile Cobalt Market: The Consideration
is made up of a significant cash component which delivers immediate
liquidity and value certainty to Cobalt 27 shareholders at a time
of significant market volatility and amidst an uncertain outlook
for cobalt prices and the global economy, and at an implied cobalt
price well in excess of the spot average price of US$12.53 per lb as of July
31, 2019.
During 2016 through until the first half of 2018, cobalt prices
experienced a significant run-up. In the latter half of 2018,
cobalt prices began to decline significantly, and by June 2019, prices had fallen 66% from their
April 2018 peak of US$44.10 per lb to US$15.12 per lb. As of July 31, 2019, spot average cobalt prices have
fallen further to US$12.53 per lb as
reported by Fastmarkets. The Board and Special Committee's
knowledge of cobalt supply-demand dynamics informed their view that
a sustained rebound in cobalt prices in the short to medium term is
unlikely.
Nickel 28 to Provide Continued Exposure to Battery Metal
Upside and the Electric Vehicle Revolution: Cobalt 27
shareholders, through their ownership of shares of Nickel 28, will
continue to be exposed to the electric vehicle revolution. In
connection with the transaction, Cobalt 27 will contribute its
8.56% joint venture interest in the producing, long-life, low-cost
Ramu nickel-cobalt integrated mine and plant, certain royalty
interests, and shares of Giga Metals Corporation to Nickel 28.
Nickel 28 will be well funded with US$5
million in cash at inception with no corporate debt. Since
the announcement of the Arrangement, as of August 8, 2019, nickel prices have increased by
approximately 33%, while cobalt prices have decreased by
approximately 13%.
Nickel 28 is valued at C$2.18 per
share which is comprised of the purchase price that Cobalt 27 paid
for each of the assets being transferred to Nickel 28 plus an
enhanced value for the Dumont royalty which recently released an
updated feasibility study. These assets are primarily leveraged to
the price of nickel and all of these assets were purchased in a
substantially lower nickel price environment.
Repayment of Debt: Cobalt 27 is expected to have up
to US$48.5 million of net corporate
debt on closing of the Arrangement (consisting of current drawings
under its credit facilities and transaction expenses), which debt
will be repaid by Pala. Absent the transaction, Cobalt 27 would
need to service and repay the majority of the aforementioned debt
using its own resources.
Comprehensive Review of Strategic Alternatives and
Independent Oversight: The Cobalt 27 Board of Directors
established a Special Committee comprised entirely of independent
directors to review and oversee the consideration of strategic
alternatives, the negotiation of the transaction with Pala and to
make recommendations to the Board. Several months prior to entering
into the transaction, the Company retained Scotia Capital to
conduct a process to evaluate business and strategic opportunities
with the objective of maximizing shareholder value, which included
the possibility of a potential strategic transaction with other
prospective acquirors (including royalty/streaming companies,
industrial companies, commodities traders and private equity
sponsors). Twelve (12) other prospective acquirors were contacted
in addition to Pala, eleven (11) of whom were contacted by Scotia
Capital, which led to three (3) additional non-binding indicative
proposals for alternative transactions. However, none of the
proposals were for an acquisition of Cobalt 27 as a whole, and each
proposal was for total cash consideration less than the cash
component per share of Pala's offer.
Ultimately, the Special Committee, having supervised the process
that led up to and the negotiation of the Arrangement and taken
into account such matters as it considered relevant and after
receiving independent legal and financial advice, unanimously
determined that the Arrangement is in the best interests of the
Company and unanimously recommended that the Board approve the
Arrangement and recommend that the Cobalt 27 shareholders vote FOR
the Arrangement. After careful consideration and taking into
account, among other things, the recommendation of the Special
Committee, the Board, after receiving legal and financial advice,
unanimously determined that the Arrangement is in the best
interests of the Company and approved the Company's entry into the
arrangement agreement. Accordingly, the Board unanimously
recommends that Cobalt 27 shareholders vote FOR the
Arrangement.
Meeting Details and Record Date
The annual general and special meeting of shareholders of Cobalt
27 is scheduled for 10:00 a.m.
(Toronto time) on September 12, 2019 at the offices of Stikeman
Elliott LLP, 5300 Commerce Court West, 199 Bay Street, Toronto, Ontario, to consider a special
resolution to approve the Arrangement.
Only Cobalt 27 shareholders of record at the close of business
on August 12, 2019 will be entitled
to receive notice of and vote at the meeting, or any adjournment or
postponement thereof.
Shareholder Information and Questions
Cobalt 27 shareholders who have questions about the Circular, or
need assistance with voting their shares, can contact our proxy
solicitation agent, Kingsdale Advisors:
Kingsdale Advisors
North American Toll-Free Number:
+1.888.518.6554
Outside North America, Banks,
Brokers and Collect Calls: +1.416.867.2272
Email: contactus@kingsdaleadvisors.com
North American Toll-Free Facsimile: +1.888.683.6007
Facsimile: +1.416.867.2271
Shareholders are encouraged to vote today using the internet,
telephone or facsimile. Your vote is important regardless of the
number of Cobalt 27 shares you own.
About Cobalt 27
Cobalt 27 Capital Corp. is a leading battery metals streaming
company offering exposure to metals integral to key technologies of
the electric vehicle and energy storage markets. Cobalt 27 holds an
8.56% joint venture interest in the long-life, world-class Ramu
operation which currently delivers near-term attributable nickel
and cobalt production. Cobalt 27 also manages a portfolio of 11
royalties. Cobalt 27 also owns physical cobalt and a cobalt stream
on the Voisey's Bay mine.
Cautionary Note Regarding Forward-Looking Statements
This news release contains certain information which constitutes
'forward-looking statements' and 'forward-looking information'
within the meaning of applicable Canadian securities laws. Any
statements that are contained in this news release that are not
statements of historical fact may be deemed to be forward-looking
statements. Forward looking statements are often identified by
terms such as "may", "should", "anticipate", "expect", "potential",
"believe", "intend" or the negative of these terms and similar
expressions. Forward-looking statements in this news release
include, but are not limited to statements with respect to: the
anticipated benefits associated with the Arrangement; the business
and assets (including their implied value) of Nickel 28 and its
strategy going forward; future prices of cobalt, nickel and other
commodities; statements pertaining to the adoption of electric
vehicles and battery storage globally; the Consideration to be
received by shareholders of Cobalt 27, which may fluctuate in value
due to Nickel 28 common shares forming part of the Consideration;
and the satisfaction of closing conditions including, without
limitation (i) required Cobalt 27 shareholder approvals; (ii)
necessary court approval in connection with the plan of
arrangement; (iii) no exercise of the termination rights available
to the parties under the Arrangement Agreement; (iv) Cobalt 27
obtaining the necessary approvals from the TSXV for the listing of
the common shares of Nickel 28 in connection with the Arrangement;
and (v) other closing conditions, including, without limitation,
other regulatory approvals and compliance by Cobalt 27 and Pala
with various covenants and representations contained in the
Arrangement Agreement. In particular, there can be no assurance
that the Arrangement will be completed. Readers are cautioned not
to place undue reliance on forward-looking statements.
Forward-looking statements involve known and unknown risks and
uncertainties, most of which are beyond the Company's control. For
more details on these and other risk factors see the Circular on
file with Canadian securities regulatory authorities on SEDAR at
www.sedar.com under the heading "Risk Factors". Should one or more
of the risks or uncertainties underlying these forward-looking
statements materialize, or should assumptions underlying the
forward-looking statements prove incorrect, actual results,
performance or achievements could vary materially from those
expressed or implied by the forward-looking statements.
The forward-looking statements contained herein are made as of
the date of this release and, other than as required by applicable
securities laws, the Company does not assume any obligation to
update or revise them to reflect new events or circumstances. The
forward-looking statements contained in this release are expressly
qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. No securities regulatory authority has
either approved or disapproved of the contents of this news
release.
SOURCE Cobalt 27 Capital Corp