Corporación Nacional del Cobre de Chile (Codelco) has signed a binding scheme implementation deed (SID) to acquire 100% of Lithium Power International (LPI), under a scheme of arrangement.
Under the terms of the SID, LPI shareholders will receive A$0.57 ($0.36) in cash per each LPI share held, pursuant to the scheme consideration.
The Scheme Consideration values LPI at a fully diluted equity value of around A$385m ($244m), which is a 119% premium to the closing share price of A$0.26 per LPI share on 26 September 2023.
LPI Board of Directors has unanimously recommended the shareholders vote in favour of the Scheme and approve the Scheme, in the absence of a superior proposal.
The transaction is subject to certain customary conditions, including approval of LPI shareholders, the court, and an Independent Expert supporting the Scheme, among others.
It is also conditional upon Codelco obtaining approval from Australia’s Foreign Investment Review Board, but not to any financing or due diligence conditions.
LPI CEO and managing director Cristobal Huidobro said: “The transaction provides certainty for LPI shareholders when compared to a stand-alone development scenario of the Company’s Maricunga Lithium Project and in the context of an uncertain economic outlook more broadly.
“We believe this transaction is a great outcome for LPI shareholders and for other stakeholders including employees, suppliers and the people of Chile, all of whom will benefit from the Maricunga Lithium Project being developed by a large, well-financed and experienced mine developer and producer as Codelco.
“The board believes this transaction reflects the hard work and achievements of the LPI team and the significant progress made in advancing the Maricunga Lithium Project to its current pre-development stage.”
Codelco, a Chilean state-owned copper producer, accounts for around 5.4% of the world’s proven and probable copper reserves, according to the US Geological Survey.
The company has a lithium division that comprises mining tenements and key strategic permits to develop lithium projects in the Maricunga and Pedernales salt flats.
The SID includes customary exclusivity obligations on LPI, including no shop, no talk and no due diligence restrictions, and is also bound by other customary provisions.
It also details circumstances under which LPI may be required to pay a break fee to Codelco and where Codelco may be required to pay LPI a reverse break fee, of around A$3.85m.
Canaccord Genuity (Australia) served as the financial advisor and Ashurst Australia as the Australian legal advisor to LPI on the transaction.
Rothschild & Co. served as financial advisor, Allens as Australian legal advisor, Carey as Chilean legal advisor and Deloitte as tax and accounting advisor to Codelco.
