PALLINGHURST Resources and its subsidiary Rox ’s potential buy-out offer for AIM-listed Gemfields could be the “logical next step” in Pallinghurst’s strategy of investing in coloured gemstones, Pallinghurst CEO Arne Frandsen said yesterday.
Gemfields said on Friday the companies were in discussions about a potential offer to Gemfields minorities at 8p a share, but it said the discussions were preliminary and might not lead to an offer.
The company owns an emerald mine in Zambia and licences over other deposits of semiprecious stones in the country. One of the executive directors of Gemfields is Sean Gilbertson, the son of Pallinghurst founder and chairman Brian Gilbertson.
If all Gemfields shareholders accepted the Pallinghurst-Rox offer, it would cost them £9,28m to buy out Gemfields. Together they already hold 68% of the shares.
Frandsen said Pallinghurst owned about 49% of Rox Conduit, so the cost to Pallinghurst would be about R60m.
He said there were two reasons for considering the transaction. First, it had become evident from other examples that early-stage development companies were better off in the private than the public environment. The second was that there was not a big appetite among investors for companies investing in precious stones. The timing seemed opportune to take Gemfields private.
After Pallinghurst and Rox, the next biggest shareholder in Gemfields was JPMorgan, Frandsen said. The mechanics of the offer were being considered but Pallinghurst and Rox might simply make the offer and take what acceptances were available, leaving Gemfields listed, or they might proceed to delist the company as a second step.
Apart from its stakes in gemstone miners, Pallinghurst owns the Fabergé luxury goods brand. It also invests in platinum group metals and in steel feed materials such as manganese and iron ore.
Gemfields recently attracted attention by making a hostile bid for Tanzanian gem miner Tanzanite One, which Tanzanite One’s directors fended off by voting a special class of shares. Frandsen said the move being considered by Rox and Pallinghurst had no connection with the Tanzanite One bid.
Pallinghurst’s shares were unchanged at 420c on the JSE yesterday.
mathewsc@bdfm.co.za