Helix Resources Limited (ASX: HLX) has released a comprehensive Target's Statement advising shareholders to reject a takeover offer by Acta Investment Group Pty Ltd. Acta’s bid, an off-market proportional offer for 25% of Helix shares at $0.005 per share, comes alongside a proposal to install three of its nominees on the Helix board. The Helix board unanimously recommends shareholders reject the offer and vote against the proposed board appointments at the company’s upcoming Annual General Meeting (AGM) on 19 November 2024.
Background on the Acta Offer
Acta’s proposal, if successful, would see Michael Povey, Kevin Lynn, and David Scoggin join the Helix board, effectively giving Acta control over company strategy despite only holding a 16.87% stake via its associate Nuevo Royalty Limited. Helix’s Target’s Statement argues that the takeover bid does not provide an adequate control premium, undervalues the company, and raises significant governance concerns.
Helix Chair, Mike Rosenstreich
Key Reasons for Rejecting the Offer
The Helix board has laid out a number of reasons for rejecting Acta’s offer, emphasising that it undervalues Helix’s potential, introduces governance risks, and lacks clarity on Acta’s intentions for the company. Helix Chair Mike Rosenstreich, himself a shareholder “deeply in the red,” makes a direct appeal to shareholders, arguing that the current board is best positioned to deliver value through Helix’s copper and gold exploration strategy in the Cobar region of New South Wales.
Scrutiny of Acta’s Proposed Directors
Helix has conducted its own due diligence on Acta’s nominees, revealing significant concerns about their track records, focus, and relevance to Helix’s strategic goals. Here’s a breakdown of the board’s assessment of each nominee:
1. Michael PoveyThe sole director of Acta, Povey is a veteran in the resources industry but juggles at least four other prominent roles, including as Executive Chair of Thomson Resources Ltd (ASX: TMZ), Chair of Volcanic Gold Mines Inc (TSX-V: VG), Non-Executive Director of Surefire Resources NL (ASX: SRN), and Technical Advisor at Gold Basin Resources Corporation (CVE: GXX). This extensive slate of commitments raises concerns about whether Povey can dedicate the necessary time and attention to Helix.
Additionally, the board highlights Povey’s lack of a demonstrated record of success in early-stage copper exploration—a key priority for Helix as it seeks to capitalise on new discoveries in the Cobar region. Helix's board views Povey’s track record as unconvincing for adding value beyond the achievements of the existing board, questioning whether he brings the focused, discovery-driven mindset they believe is critical to Helix’s future.
Lynn’s appointment would add to what Helix describes as a “crowded calendar.” He is reportedly involved with six other ASX-listed companies and approximately 21 unlisted companies. Helix’s board argues that this level of involvement could dilute his ability to provide the hands-on guidance and leadership necessary for a small exploration-focused company like Helix.
There is also a lack of transparency surrounding Lynn’s qualifications for Helix’s specific exploration goals, with the board unable to find substantial evidence of his experience or track record in copper and gold exploration. The directors therefore question whether he would be equipped to make meaningful contributions toward Helix’s objectives in developing copper assets in Australia.
3. David Scoggin
The most enigmatic of Acta’s nominees, Scoggin has little information available publicly regarding his professional experience or expertise. Helix’s board suggests that this lack of transparency and evidence of relevant skills introduces additional risk for shareholders. Given the technical and strategic focus required to pursue exploration projects, the board cautions that appointing Scoggin could bring unnecessary uncertainty and potential instability to Helix.
Governance and Strategic Concerns
Helix’s current board members, particularly Chair Mike Rosenstreich and Managing Director Dr Kylie Prendergast, both bring strong backgrounds in copper exploration and mineral project management. The directors argue that the proposed Acta nominees collectively do not add any clear strategic value over the incumbent board, nor do they possess the specific exploration and discovery skills that align with Helix’s core strategy. Additionally, the Helix board has pledged to resign if the Acta nominees gain control, indicating their lack of confidence in the governance direction Acta would bring.
Uncertain Completion and Conditional Nature of the Offer
Acta’s offer is highly conditional, with stipulations that Helix views as restrictive and potentially conflicting with its ongoing exploration efforts. For instance, the offer caps material expenditures at $50,000, which could hinder Helix’s ability to pursue exploration programs actively. Helix has already breached this condition due to its active projects, and Acta has not provided assurance that it would waive such breaches. This introduces significant uncertainty about whether the offer will even reach completion.
Potential Loss of Value Creation
Helix’s directors believe that Acta’s bid undervalues the company, particularly given its recent strides in identifying and developing new copper targets in New South Wales. The offer would only give shareholders cash for a 25% stake in their holdings, reducing their exposure to Helix’s future growth potential. Rosenstreich has underscored Helix’s focus on advancing a portfolio of high-potential projects in copper and gold, a sector attracting strong investor interest. He has hinted that Helix could be “one drill hit away” from a significant discovery, making a case that staying the course with the existing board could bring greater long-term rewards.
Lack of Sufficient Funding Details
The Helix board has raised concerns over Acta’s financial capacity to fund its offer, particularly due to sparse information about its financier, Charrua Capital LLC. Acta disclosed that Charrua Capital provides Acta with debt facilities but did not clarify the financial stability of the lender, its terms, or its repayment capacity. Helix’s directors caution that Charrua is a lender to other companies associated with Povey, further complicating the perceived reliability of Acta’s funding arrangements.
Helix Urges Shareholders to Vote Ahead of Crucial AGM Deadline
In the final stretch leading up to Helix Resources Limited’s Annual General Meeting (AGM) on 19 November 2024, the board is underscoring the urgency of shareholder participation, particularly around voting on Acta’s proposed nominees. While Acta’s proportional offer runs until 15 January 2025, Helix highlights that decisions made at the AGM will shape the company’s immediate future direction. For shareholders intending to reject the board nominees put forward by Acta, proxy votes must be submitted by the critical deadline of 17 November 2024.
Chair Mike Rosenstreich and the Helix board have made a clear case that the current board composition, with its strong technical expertise and focus on copper and gold exploration, offers the best chance of achieving meaningful discoveries and delivering long-term value to shareholders. Their message is simple: casting a proxy vote now supports a board committed to Helix’s strategy in the copper-rich Cobar region of New South Wales.
The Helix board’s final call to action is a reminder that there is indeed urgency—not for the takeover offer itself, but for shareholder participation in shaping Helix’s leadership. For those unable to attend in person, acting quickly on proxy votes will ensure their voices are counted in this pivotal AGM decision.
