De-merger of Diamond Interest
June 16 2004 - 5:00AM
UK Regulatory
RNS Number:8038Z
Conroy Diamonds & Gold PLC
16 June 2004
Conroy Diamonds and Gold plc
Proposed de-merger of Diamond Interests
Conroy Diamonds and Gold P.l.c. ("the Company") is pleased to announce the
proposed de-merger of its diamond interests into a separate entity called
Karelian Diamond Resources plc ("Karelian") by way of a Scheme of Arrangement.
The Company intends to transfer its diamond interests into Karelian in exchange
for which, Conroy Diamonds and Gold shareholders will receive shares on a one
for six basis in Karelian. Application will be made by Karelian for an AIM
Listing in due course.
It is necessary, under Irish Company Law, for this proposal to be effected by
way of a Scheme of Arrangement to obtain the approval of the Company's
shareholders and the High Court of Ireland.
An EGM for Conroy Diamond and Gold shareholders to approve the proposals has
been convened for 8th July 2004 after which Court approval to the Scheme of
Arrangement will be sought.
Reasons for the de-merger
The Company is an exploration company whose present principal focus is on a
major geological structure in Ireland known as the Longford-Down Massif where it
is currently carrying out exploration for gold and base metals in the areas in
respect of which it has been granted prospecting licences and has to date
identified two potentially economically viable gold deposits together with a
number of other gold occurrences. In addition, the Company has 11 exploration
licences in Finland in potentially diamond bearing areas on which it has been
carrying out exploration activities. In broad terms, it can be said that the
Company has gold interests and diamond interests.
The Company's gold exploration project in Ireland has moved from pure
exploration to assessment and evaluation. The board of directors of the Company
are of the view that, at this stage, a segregation of the Company's diamond
interests from its other interests would be the most effective way of realising
the full potential of both such interests. The directors believe that such a
segregation would enable the Company to focus on its gold exploration interests
and would also facilitate a greater understanding of the Company's two separate
activities by shareholders, the investment community and related markets.
De-Merger of Diamond Interests
It is therefore proposed to transfer the diamond interests of the Company out of
the Company to a separate entity, independent from the Company. It is proposed
that, pursuant to the Scheme of Arrangement, such a transfer would be effected
by a transfer of the diamond interests to a newly incorporated company, Karelian
Diamond Resources plc ("Karelian"), in return for the issue by Karelian of
shares to the Company's shareholders.
The de-merger of the diamond interests will be effected by means of the Scheme
of Arrangement, pursuant to which the diamond interests will be transferred from
Conroy Diamonds and Gold to Karelian in consideration of the issue by Karelian
of fully paid ordinary shares to the holders of ordinary shares in Conroy
Diamonds and Gold based on their holdings on the Record Date. Accordingly, each
shareholder in Conroy Diamonds and Gold will receive:-
For every six ordinary Conroy Diamonds and Gold shares held on the
Record Date, one ordinary fully paid share in Karelian.
Fractions of Karelian Shares will be disregarded. As the Karelian Shares to be
issued will be credited as fully paid, Conroy Diamond and Gold shareholders will
not be required to make any payment for these shares.
Company Law
Under Irish Company Law the Scheme of Arrangement requires the sanction of the
High Court, pursuant to the provisions of Section 201 of the Companies Act 1963
of Ireland. Accordingly, the resolutions set out in notices convening the Court
Meetings if passed will require such sanction before becoming fully effective.
Conroy Diamonds and Gold proposes to present the Scheme of Arrangement to the
High Court at the earliest possible opportunity after the meetings. Subject to
the High Court sanction, it is intended that Karelian will seek admission of its
own shares to AIM during early or mid August, 2004.
Conroy plc
It is also proposed that, on the day immediately following the proposed transfer
of the diamond interests of the Company, Karelian will acquire the diamond
interests of another company, namely Conroy plc. Conroy plc is a public limited
company incorporated under the laws of Ireland. Conroy plc is also an
exploration company. Its wholly owned subsidiary Nordic is the holder of diamond
interests in Finland, namely, fourteen claims and twenty six claim reservations
but has no other assets. It is proposed that, following the acquisition of the
Company's Diamond Interests, Karelian will acquire the entire issued share
capital of Nordic from Conroy plc in consideration of the issue of shares in
Karelian to Conroy plc.
Valuation and Basis of Allocation
(a) The Company's independent valuers, CSA Group have estimated that the
fair market value of the exploration interests that it is proposed will
be transferred to Karelian (namely those interests held by the Company
and by Conroy plc) is in the aggregate Euro2,660,000. CSA Group have also
estimated that the proportion of the said value attributable to
interests held by Conroy plc is .705/1 and the proportion attributable
to interests formerly held by the Company is .295/1.
(b) On the foregoing basis, it is proposed that, in consideration of the
transfer by the Company of its diamond interests to Karelian, the
shareholders of the Company will receive, in aggregate, approximately
29.5% of the issued share capital of Karelian and that in consideration
of the transfer by Conroy plc of Nordic, Conroy plc will receive
approximately 70.5% thereof. The directors intend that, in this way, the
shareholders of the Company will receive shares in Karelian which have a
value that is approximately equivalent to the value of the diamond
interests which will have been transferred by the Company.
(c) To give effect to the foregoing, it is proposed that Karelian will issue
and allot in the aggregate approximately 34,772,000 fully paid ordinary
shares to the members of the Company and to Conroy plc, represented by
approximately 10,257,000 ordinary shares in Karelian being allotted to
the shareholders of the Company and approximately 24,515,030 ordinary
shares in Karelian being allotted to Conroy plc.
Reduction of Capital
As part of the proposal for the Scheme of Arrangement, Conroy Diamonds and Gold
will transfer its shares in the Diamond Subsidiary at the book value of
approximately Euro1,025,000 to Karelian. Accordingly, it is proposed that when the
sanction of the High Court is being sought for the Scheme of Arrangement, its
approval will also be sought for the reduction of the Conroy Diamonds and Gold
share premium account by Euro1,025,000 to reflect the de-merger of the Diamond
Interests.
The Board of Directors of Conroy Diamonds and Gold is of the view, having
consulted its nominated adviser, Seymour Pierce Limited, that the terms of the
transactions are fair and reasonable and are in the best interest of
shareholders as a whole and the Company. The Directors unanimously recommend
that shareholders vote in favour of the resolutions to be put to the Court
Meetings and to the Shareholders at the EGM as they intend to do in respect of
their beneficial shareholdings, which together amount to 6,000,060 ordinary
shares representing 9.75% of the current issued share capital of the Company.
--------------------------------------------------------------------------------
Further information:
Professor Richard Conroy/Maureen Jones
Conroy Diamonds and Gold plc +353 1 661 8958
Ron Marshman
City of London PR + 44 (0)20 7628 5518
Sarah Wharry / John Depasquale
Seymour Pierce Limited + 44 (0)20 7107 8000
This information is provided by RNS
The company news service from the London Stock Exchange
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