The fight for Newpac

NEW Hope Corporation yesterday launched a takeover bid for Resource Pacific, sparking a buying frenzy with Resource Pacific's share price shooting up 20% - marking it as the biggest resource stocks mover in dollar terms for the day.
The fight for Newpac The fight for Newpac The fight for Newpac The fight for Newpac The fight for Newpac

Newpac mine, Resource Pacific.

Staff Reporter

Resource Pacific started trading yesterday morning at $A2.43 and closed at $2.91, up 19.75%.

New Hope has not been deterred by a $A165 million capital raising venture launched by Resource Pacific and hopes to gain control of the company's Newpac mine in the Hunter Valley region of New South Wales.

The mine is Resource Pacific's only operation and is wrapping up its first year of longwall production.

In its bidders statement to shareholders, New Hope offers 0.94 of a New Hope share for every Resource Pacific share, valuing the company at $754 million.

It said shareholders would enjoy more security from their investment with New Hope, which has a diverse portfolio of projects including its opencut New Acland mine, interest in coal seam gas company Arrow Energy and well-established domestic and export markets.

Furthermore, it said Resource Pacific is currently a high-risk operation which is vulnerable due to its sole mine operation that has had ongoing delays in ramping up its longwall and has suffered financial restrictions.

Resource Pacific managing director Paul Jury advised his shareholders to take no action on the bid while the company assesses its merits.

Jury said the bid "fails by a substantial margin to recognise Resource Pacific's growth potential and future value".

He said Newpac was only just beginning to realise its potential and would capitalise on infrastructure investments made by the company over the past years during its 28-year mine life.

Furthermore, Jury said that financially the company was in a strong position after the funds raising venture and had developed strong relationships with blue-chip coal importers in Asia that had committed to buy 100% of the mine's 2008 saleable production.

He urged shareholders to keep their faith in the company, stating that with Resource Pacific "your shareholding ... is a direct investment in the coal industry when prices and export demands are strong" as opposed to supporting New Hope whose "assets are invested in a range of sectors with uncertain potential".

The New Hope offer is open to Resource Pacific shareholders from December 3 to February 1.