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Fura Gems poised to go private with shareholder Lord of Seven Hills Holdings' premium acquisition deal

Lord of Seven Hills Holdings already holds around 51.5% of Fura and is a majority shareholder

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Fura will be amalgamated into a new subsidiary of Lord of Seven Holdings called 2771063 Ontario Inc

Fura Gems Inc (CVE:FURA) (OTCMKTS:FUGMF), the gemstone mining and marketing company, announced Friday a deal, which would see it be bought by its majority shareholder Lord of Seven Hills Holdings and go private.

Lord of Seven Hills Holdings already holds around 51.5% of Fura and is offering C$0.15 a share — a 42% premium over the volume-weighted average trading price of Fura shares for the 20 days up to August 13 and a 36% premium to the closing price on that date.

READ: Fura Gems to acquire Australian mining group Great Northern Mining

Fura shares leapt up nearly 32% in early Toronto deals at C$0.14.

"This transaction represents an opportunity for shareholders of Fura to monetize 100% of their investments in Fura at a cash price that represents a significant premium to the trading price of Fura’s common shares," said Dev Shetty, the CEO of Fura, in a stock market statement.

"Despite significant marketing efforts, liquidity and access to capital have been challenging, which we believe largely result from the limited number of companies listed on the TSXV that operate in the coloured gemstone sector. We anticipate that with ongoing support from Lord of Seven Hills Holdings FZE throughout the ongoing global COVID-19 pandemic, we will be able to advance our existing projects until we are able to generate revenue.”

Michael Kuan, of Lord of Seven Hills Holdings, added: "We believe that Fura is uniquely positioned in its industry as a result of its distinct portfolio of assets, which includes emerald, ruby and sapphire properties (being all three coloured gemstones)."

Fura would be amalgamated into a new subsidiary of Lord of Seven Holdings called 2771063 Ontario Inc and all issued and outstanding common shares, other than those already held by the purchaser, will be converted, on a one-for-one basis into redeemable shares of the amalgamated corporation.

Fura intends to call a meeting of shareholders to be held in early October this year to seek shareholder approval for this amalgamation. The board has recommended that shareholders vote in favour.

The transaction is expected to close in mid-October 2020, subject to all conditions being met.

All of the directors and officers of Fura, together with certain other Fura shareholders, collectively representing around 20% of shares, have entered into support and voting agreements with the purchaser and have agreed to vote in favour.

Also in the statement, Fura revealed it has arranged for a bridge loan of US$8.75 million, which will be available for draw down by Fura pursuant to an amendment made to the grid promissory note previously issued to Lord of Seven Hills Holding.

Proceeds are expected to be used for closing of Fura's acquisition of Great Northern Mining Pty Ltd, as announced on August 7, 2020 and general corporate purposes, including costs connection with the deal.

Contact the author at giles@proactiveinvestors.com

Quick facts: FURA Gems

Price: 0.145 CAD

Market: TSX-V
Market Cap: $39.45 m

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