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WFW advises Baobab Resources on cash offer and de-listing

21 April 2015

Mineral exploration and development company Baobab Resources Plc (“Baobab”) has declared the £20.5 million cash offer for the company by major shareholder Redbird Investments Limited (“Redbird”) “unconditional in all respects”, as Redbird has acquired approximately 81% of the shares in Baobab. Watson Farley & Williams (“WFW”) advised Baobab on the offer and the proposed de-listing of the company’s shares from trading on the London Stock Exchange’s Alternative Investment Market (AIM).

Redbird, a wholly owned investment vehicle of African Minerals Exploration & Development Fund SICAR, S.C.A., paid a cash consideration of 6p per share in Baobab for the company’s shares that were not already owned by Redbird. The offer will remain open until 1 pm on May 1st 2015 and the de-listing of Baobab’s shares to trading on AIM will become effective from 7am on May 20th.

Baobab’s flagship project is the Tete pig iron and ferro-vanadium project in Mozambique. Following the completion of the offer and the proposed de-listing, Baobab plans to raise additional equity of US$12m in order to fund the completion of a bankable feasibility study on the Tete project, “as soon as is practicable”.

WFW advised Baobab on the cash offer and de-listing and all relevant regulatory approvals. Baobab is a long-time client of the firm, with WFW having advised the company on its admission to trading on AIM in 2007, and various subsequent transactions, including the investment by International Finance Corporation in Baobab and its Tete project.

The WFW team was led by WFW Head of Natural Resources, partner Jan Mellmann, assisted by associate Jenny Hodges.

Partner Jan Mellmann said: “The acceptance of Redbird’s cash offer and de-listing marks a significant milestone in Baobab’s history. It is also a notable reminder that natural resources-focussed private equity funds are willing to take a longer term view in order to generate desirable returns in fluctuating commodity markets.”