Lapsed Canyon offer leaves unresolved risks after regulatory censure

Takeovers Panel Rejects Integrity of Canyon Bid Process

The Australian Takeovers Panel has delivered a serious rebuke to the process surrounding A2MP Investments FZCO’s takeover bid for Canyon Resources Limited (ASX:CAY), declaring the circumstances unacceptable even though the offer had already lapsed. The Panel said Canyon shareholders were not given enough information to assess the bid in an efficient, competitive and informed market.

The finding centres on three issues: what A2MP told shareholders about its intentions for Canyon, the assumptions it substituted into the Minim Martap bauxite project’s definitive feasibility study, and its use of Canyon information that was not publicly available. The Panel also said the combined effect of the offer’s structure, the company’s funding uncertainty and its discounted price had the potential to coerce shareholders into accepting.

Conflicting Messages About Minim Martap Funding

A2MP offered A$0.05 a share on 29 July, about 42.5% below Canyon’s 8.7-cent closing price the previous day. Its bidder’s statement described Canyon’s financial position as deteriorating, said funding options were narrowing and argued that Minim Martap was no longer viable in the short and medium term in its current form and funding structure.

Yet in a letter to AFG Bank Cameroon the following day, A2MP said the bid would not change the project’s operating plan, that it would assume responsibility for funding Minim Martap through first commercial sales and beyond, and that its guarantee of the project’s approximately US$140 million facility remained in place. The Panel considered those intentions materially inconsistent with the information provided to Canyon shareholders. The decision follows the Takeovers Panel application, which had challenged the bid’s disclosure and alleged coercion amid financing uncertainty.

Revised Project Economics Put Under Scrutiny

A2MP also adjusted key assumptions in Canyon’s feasibility study, citing a lower product premium, higher ramp-up freight, increased levies and taxes, and additional logistics capital expenditure. It used those changes to argue that the project’s cash flows appeared unable to service the existing AFG facility, potentially requiring further shareholder funding.

The Panel said shareholders were not given sufficient information to credibly assess the revised inputs, including the sources underpinning A2MP’s analysis. That criticism matters because the revised economics formed part of the case for accepting a bid that Canyon’s independent expert had assessed as neither fair nor reasonable, with a valuation range of 14 cents to 44.6 cents a share. Separately, AFG drawdown suspension had been reported after the lender suspended further funding while it reviewed the project schedule, financial model and site conditions.

Confidential Information Adds a Second Regulatory Breach

The Panel found that Canyon materials and correspondence containing confidential information had reached A2MP directors and financial advisers before and during the bid. A2MP acknowledged that some of the information helped inform its financial analysis and valuation work, while its bidder’s statement said Canyon-related information had been prepared using publicly available material.

The Panel considered that use of Canyon’s confidential information in connection with the offer was inconsistent with an efficient, competitive and informed market, regardless of whether the material was specifically disclosed in the bidder’s statement. The finding is distinct from the disclosure concerns: it goes to the information advantage available to a bidder that already held, together with its associates, voting power of 55.56% in Canyon.

Final Orders Could Determine the Practical Consequences

A2MP’s offer lapsed on 21 September, so the declaration does not itself revive the bid or determine the ultimate ownership outcome. The Panel is still considering whether to make final orders and, if so, what those orders should be. Its full reasons are also yet to be published.

That leaves the immediate consequence unresolved. The declaration formally records that the proposed control transaction was not conducted on an informed basis, but the commercial effect will depend on the orders that follow and on any fresh developments around Minim Martap’s funding, AFG’s facility and the relationship between Canyon and A2MP.