Alara Resources Limited (ASX: AUQ) Faces Legal Challenge Over Rights Issue
Overview of the Application
Alara Resources Limited (ASX: AUQ) is currently facing an application from Mr Kent Bedford regarding its recent underwritten renounceable rights issue. The rights issue, announced on 4 November 2024, is designed to raise approximately $15.3 million by offering shares at $0.034 each. The issue is being fully underwritten by Mahe Capital Pty Limited, with Al Tasnim Infrastructure LLC holding 13.88% voting power in Alara.
The application was received by the Takeovers Panel but has not resulted in an appointed sitting Panel or any decisions on proceeding at this time.
Concerns Raised by the Applicant
The applicant contends that the structure and scale of the rights issue could unacceptably increase control rather than fulfil Alara’s fundraising purposes. Specific grievances include the ratio of the rights issue and its pricing, which the applicant argues are designed to enhance control disproportionately.
The applicant is seeking interim measures to halt the issuance of new shares until the completion of the application review. They propose an alternative rights issue at a 1-for-5 ratio and call for equitable treatment of shareholders in the distribution of shortfall shares. Final orders sought include limiting Al Tasnim Infrastructure’s voting power to under 19.9% and requiring shareholder approval for rights issues in the subsequent two years.
Company’s Response
No formal response from Alara Resources has been provided regarding the application. The company aims to move forward with the rights issue as planned, with new shares and options anticipated to be issued by 26 November 2024.
Motley Fool contributor Abbie Stokes has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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