Toro and Nova merge to form new uranium company

A new Australian uranium powerhouse valued at $400 million is to be created....

  A new Australian uranium powerhouse valued at $400 million is to be created under a friendly merger proposal announced yesterday.ASX-listed uranium explorers, Toro Energy Ltd and Nova Energy Ltd yesterday jointly announced the all-scrip merger in which Toro is offering 5.5 of its shares for every one Nova share.If approved by Toro shareholders in coming months, the major shareholder in the enlarged entity – which will have ~ 490 million ordinary shares on issue - will be former mutual shareholder in both companies, Oxiana Ltd (46%) with 227.5 million shares. Minotaur Exploration Ltd, with 36 million shares, will control 7.3% with other holdings by Argonaut Ltd, 4%, and Allarrow Pty Ltd (and its associated entity) 3.5%. All of the above companies have agreed to the merger.The enlarged Toro Energy will be one of Australia’s largest uranium explorers and project developers by market capitalisation, with a strengthened Board and management team to be able to carry through development and into production.It will own or control advanced resources and greenfields uranium exploration projects in Western Australia, South Australia and the Northern Territory – one of the largest such single company exploration footprints in Australia - as well as the African states of Namibia, Guinea and Morocco.In a joint statement, ongoing Toro Managing Director, Greg Hall, and Nova Energy Managing Director and proposed Toro Executive Director, Dr Tim Sugden, said: “This is a paradigm shift for both companies. “The new Toro has the potential to have two Australian uranium projects in production by 2012, will have the critical liquidity and financial quantum to take an active part in the uranium sector’s increasing consolidation while attracting a wider investor base including domestic and offshore institutions. “This latter factor in itself will value-add to our scrip and enhance our scope to raise funds, pursue growth organically and by acquisition, significantly reduce project risk and increase development potential.”Based on the Offer and the last trading price for Toro, the Toro-Nova merger values the new entity at approximately $400 million.The offer of 5.5 Toro shares for every one Nova share represents a 19% premium to Nova’s last trading price of $3.70 per share on 2/8/07, valuing the merger target at $276 million or $4.40 per share. It also represents a 37% premium to Nova shareholders on a 60 day VWAP basis for both companies.