New Gold Inc. (NGD, NGD.TO) and Rainy River Resources Ltd. (RR.TO) jointly announced that New Gold has formally commenced its take-over bid to acquire all of the outstanding common shares of Rainy River at a price of C$3.83 per share. The Offer represents a premium of 67% to the volume weighted average price of Rainy River shares on the Toronto Stock Exchange for the 20 trading days ended May 30, 2013, the last trading day prior to announcement of New Gold's intention to make the Offer.
As per the Offer, Rainy River shareholders will be entitled to receive, at their option, either C$3.83 in cash or 0.5 of a New Gold share, in each case subject to pro ration, for each Rainy River share they own. The maximum amount of cash payable by New Gold under the Offer will be approximately C$198 million and the maximum number of shares issuable by New Gold will be approximately 25.8 million, based on the number of Rainy River shares outstanding on May 30, 2013 on a fully-diluted basis as such term is defined in the Offer.
The Offer is subject to customary conditions, including that a minimum of 66 2/3% of the outstanding Rainy River shares are tendered to the Offer. The Offer values the fully-diluted in-the-money share capital of Rainy River, net of Rainy River's current cash balance, at approximately C$310 million.
The Offer is open for acceptance until 5:00 p.m. (Toronto time) on July 24, 2013, unless the Offer is extended or withdrawn.
In late-May 2013, New Gold and Rainy River Resources announced they entered into a definitive acquisition agreement, whereby New Gold would offer to acquire all of the outstanding common shares of Rainy River through a friendly take-over bid.
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