Why Metals X Is Betting $134M on a Partial Stake in Greentech Amid Trading Freeze

Context and Background

Metals X Limited (ASX – MLX) has formally announced a pre-conditional voluntary cash partial offer to acquire up to 382.48 million shares, representing 28% of the issued capital, in Greentech Technology International Limited (HKSE – 00195). This move follows Greentech's failure to meet certain pre-conditions required for a possible full takeover offer, leading Metals X to pursue a partial stake acquisition instead.

Greentech's shares have been suspended from trading on the Hong Kong Stock Exchange since September 2024 due to delays in publishing interim financial results. This suspension has left shareholders unable to trade their shares on the open market, increasing the appeal of Metals X's partial offer as a liquidity option.

Offer Details and Valuation

The offer price is set at HK$0.35 per share, which represents a 25% premium over the last trading price of HK$0.28 before the suspension. However, this price is at a discount to the recent average closing prices over 5, 10, and 30-day periods, as well as a significant discount of approximately 53% to Greentech's audited net asset value per share as of December 2023.

The total cash consideration for full acceptance of the partial offer would amount to approximately HK$133.87 million. Metals X has confirmed it will finance this offer from internal resources, with Yu Ming Investment Management Limited appointed as its financial adviser.

Strategic Rationale and Shareholding Impact

Metals X's principal asset is its 50% interest in the Bluestone Mines Tasmania Joint Venture (BMTJV), which operates the Renison Tin Mine in Tasmania. The remaining 50% interest in BMTJV is held by a non-wholly owned subsidiary of Greentech. By acquiring a substantial stake in Greentech, Metals X aims to strengthen its influence over the joint venture and the mine's long-term development.

Currently, Metals X holds no shares in Greentech, while parties acting in concert hold a negligible 0.06%. Upon completion of the partial offer, Metals X could hold up to 28%, becoming a significant shareholder but not reaching the 30% threshold that would trigger a mandatory general offer under the Hong Kong Takeovers Code.

Regulatory and Procedural Considerations

The partial offer is subject to pre-conditions, including obtaining consent and waivers from the Executive under the Hong Kong Takeovers Code. Metals X has applied for these consents, and the offer document is expected to be dispatched to shareholders within 21 days of satisfying these conditions.

The offer is unconditional once made and open to all qualifying shareholders, providing them an opportunity to realise their investment despite the ongoing trading suspension. However, the offer may not proceed if the pre-conditions are not met by the end of June 2025.

Market and Shareholder Implications

The partial offer provides liquidity to shareholders who have been unable to trade Greentech shares due to the suspension. It also reshapes the shareholding structure, with Metals X potentially becoming a substantial shareholder. The public float is expected to remain above the 25% minimum requirement post-offer, although it could dip below if only public shareholders accept the offer.

Investors will be watching closely for regulatory approvals, acceptance levels, and any updates on Greentech’s delayed financial reporting. The offer underscores Metals X's strategic commitment to the Renison Tin Mine and its broader ambitions in the tin mining sector.