Board ‘acted independently’ in RDG decisions, says MinRes chair
Lithium and iron-ore miner Mineral Resources (MinRes) has executed a binding agreement to acquire the assets of Resource Development Group (RDG), including the failed company’s Lucky Bay garnet mine, after creditors voted on September 1 to approve the miner’s restructuring plan.
The transaction comes after RDG, once led by Andrew Ellison, the brother of MinRes billionaire founder Chris Ellison, entered voluntary administration in July. Administrators McGrathNicol opted for MinRes’ proposal, saying it would deliver creditors more value than liquidation or alternative bids.
Under the agreement, MinRes will forgive about A$146-million in loans advanced to RDG and inject A$14.5-million to cover administration and working capital, according to the Australian Financial Review (AFR).
The newspaper reported recently that the takeover has drawn criticism from minority shareholders, who argue the deal wipes out their stakes.
MinRes chairperson Malcolm Bundey said on Tuesday that the board acted independently, without input from Chris Ellison or MinRes executives who also sit on RDG’s board. “The board and I sought to ensure that MinRes shareholders could realise some value from their investment, and that there were no perceived conflicts in our decisions on RDG’s future.”
RDG collapsed in July after MinRes pulled its funding, with less than A$6-million in cash and a cashflow-negative garnet mine that had cost at least A$90-million to build, according to the AFR.
MinRes has booked a A$222-million impairment on its investment in the company, contributing to a near A$900-million yearly loss.
The Perth-based miner said it would now evaluate how to best realise value from the assets.
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