Kingwest Resources Ltd (ASX:KWR) has agreed to a revised consideration for the proposed merger with Brightstar Resources via a scheme of arrangement under which Brightstar will acquire 100% of shares in Kingwest.
Under the agreement, Kingwest shareholders will receive one Brightstar share for every 0.38 shares held on the scheme record date.
Upon implementation of the scheme, Kingwest shareholders will hold about 47% and Brightstar shareholders will hold about 53% of the merged group respectively.
Kingwest believes that this strategic consolidation of gold assets will materially increase scale to the benefit of all shareholders and reduce the timeline for potential production.
Positive momentum shift for gold
Kingwest chairman Gregory Bittar said: “The Kingwest board is pleased to announce the agreement with Brightstar which provides for a merger of equals as a first step towards transforming Kingwest into a larger and more diverse junior gold company.
“At a time which appears to mark a positive momentum shift for gold equities globally, the opportunity to combine the assets of Kingwest and Brightstar presents a significant value opportunity for all shareholders."
Board composition
The initial scheme contemplated Kingwest directors Gregory Bittar, Jonathan Downes and Ashok Parekh joining the Brightstar Board of Directors upon implementation of the transaction.
In consideration of the proposed Brightstar board size and composition, Ashok Parekh has indicated that he supports a smaller board with reduced financial impost on Brightstar and hence he will not join the Brightstar board.
It is now contemplated that the Brightstar board following the merger will compromise five directors: three from Brightstar including managing director Alex Rovira and two from Kingwest.
“I would also like to express Kingwest’s great appreciation to Ashok for his support during his time on the Kingwest board, particularly through this transaction," Bittar said
“Whilst Ashok was incredibly enthusiastic about being part of the merged group and serving on the Brightstar board, he recognised that it was in the interests of all shareholders for the size of the merged board to be appropriate for the size and scale of the merged group.”
The revised scheme is unanimously recommended by Kingwest’s board and each director intends to vote all Kingwest shares they control in favour of the scheme.