Energy Resources of Australia (ASX:ERA) announcement overview

Energy Resources of Australia Limited (ASX:ERA) has announced that the Takeovers Panel has declined to conduct proceedings on an application from Zentree Investments Limited and Packer & Co Ltd in relation to ERA's $880 million 19.87 for 1 renounceable entitlement offer. The offer has received a binding pre-commitment from Rio Tinto Limited, which holds 86.3% of ERA's voting power, to subscribe for approximately $760 million of the offer. If no other shareholders participate and any shortfall is not taken up, Rio's voting power in ERA could increase to up to 99.2468% following completion of the offer.

Executive commentary on the Panel's decision

The Panel considered ERA's Independent Board Committee's actions in mitigating the potential control effect of the equity raise and found that the committee took appropriate steps in the context of the circumstances facing ERA. The Panel was not inclined to second guess the committee's decisions regarding the proposed equity raise, including ERA's need for funds, the timing or quantum of this need, the assessment of alternate funding sources and strategies, and the structure of the rights issue.

Summary of Energy Resources of Australia (ASX:ERA) announcement

The Takeovers Panel has declined to conduct proceedings on an application regarding ERA's entitlement offer. The announcement highlights Rio Tinto Limited's pre-commitment to the offer, raising concerns about potential control. The Panel found that ERA's Independent Board Committee took appropriate steps to mitigate the control effect of the equity raise, leading to the decision to decline proceedings. The Panel will publish its reasons for the decision in due course on its website.