| January 27, 2009 |
| Central Sun Announces Receipt of Superior Proposal From B2Gold |
TORONTO, ONTARIO--(Marketwire - Jan. 27, 2009) - Central Sun Mining Inc. (TSX:CSM)(NYSE Alternext US:SMC) ("Central Sun" or the "Company") announces the receipt of a binding offer from B2Gold Corp. ("B2Gold") for the acquisition of all of the issued and outstanding shares of the Company by way of a plan of arrangement, pursuant to which Central Sun shareholders would be entitled to receive 1.28 common shares of B2Gold for each Central Sun common share held (the "B2Gold Transaction").
The consideration under the B2Gold Transaction represents a 45.1% premium over the closing price of $0.45 for the Central Sun common shares (the "Shares") on the Toronto Stock Exchange on January 26, 2009 and a 45.7% premium over the volume weighted average price of the Shares during the 10 day trading period ended January 26, 2009. The Superior Proposal represents a 49.7% higher price than that offered by Linear Gold Inc. ("Linear Gold"), based on closing prices on January 26, 2009.
On December 24, 2008, Central Sun entered into a letter agreement (the "Linear Agreement") with Linear Gold pursuant to which Linear Gold agreed to acquire each of the Central Sun common shares in consideration for 0.4 of a Linear Gold common share (the "Linear Exchange Ratio").
The Board of Directors of Central Sun has unanimously determined that the B2Gold Transaction constitutes a Superior Proposal within the meaning of the Linear Agreement. "The Board of Directors of Central Sun has carefully considered the proposed terms of the B2Gold Transaction as compared to the terms of the business combination with Linear Gold and, in consultation with our financial and legal advisors, has determined that the B2Gold Transaction would result in a transaction more favourable to the shareholders of Central Sun, from a financial point of view" said Stan Bharti, Chairman of the Board of Directors of Central Sun.
Macquarie Capital Markets Canada Ltd. ("Macquarie") has been appointed as financial advisor to Central Sun. Macquarie has provided an oral fairness opinion to the Special Committee of Central Sun that the B2Gold Transaction is superior, from a financial point of view, to the Linear Gold transaction.
Under the Linear Agreement, Central Sun may recommend or enter into an agreement in respect of an alternative transaction (in lieu of the business combination with Linear Gold) if the alternative transaction is determined to be a Superior Proposal by Central Sun's Board of Directors prior to the completion of the Linear business combination subject to Linear Gold's right to match such proposal. Central Sun has advised Linear Gold of the Superior Proposal determination and Linear Gold has the right to match the B2Gold Transaction until 5:00 p.m. (Toronto time) on Friday January 30, 2009. The Linear Agreement provides for the payment of a termination fee of $1,000,000 by Central Sun to Linear Gold in certain circumstances.
The proposed agreement for the B2Gold Transaction provides for, among other things, a non-solicitation covenant on the part of Central Sun, a right in favour of B2Gold to match any competing offers and for Central Sun to pay a non-completion fee payment of $2,000,000, and reimbursement of expenses, under certain circumstances.
If the Linear Agreement is terminated, Central Sun will be required to repay, within 60 days of termination, the $2,500,000 convertible debenture that Linear Gold has provided to Central Sun. The proposed terms of the B2Gold Transaction provide that B2Gold will provide Central Sun with a convertible debenture in the principal amount of $10,000,000 within five business days of signing the B2Gold Transaction agreement.
About Central Sun
Central Sun Mining Inc. is a gold producer with mining and exploration activities focused in Nicaragua. Central Sun operates the Limon Mine in Nicaragua and is converting the Orosi Mine in Nicaragua to conventional milling to increase the annual gold output. It also holds a 60% interest in the Cerro Quema Project in Panama, a 100% interest in La India property and an option to acquire a 100% interest in the Mestiza gold property both of which are located 70 kilometres by road east of its operating Limon Mine. The Company is focused on efficient and productive mining practices to establish high quality and cost effective operations. Central Sun is committed to growth by optimizing current operations, expanding mineral reserves and resources at existing mines, exploring its extensive land holdings and seeking strategic mergers or acquisitions in the Americas.
Cautionary Note Regarding Forward-Looking Information This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements regarding the terms of the proposed business combinations with Linear Gold and B2Gold and the benefits of each respective combination, any election by Linear Gold to exercise its right to match and the consequences of such election; the terms of the proposed loan from B2Gold and the repayment of the loan from Linear Gold, the conclusions of fairness opinion of Macquarie, its underlying assumptions and parameters and the receipt of a written fairness opinion and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking information is based on various assumptions and on the best estimates of CSM as of the date hereof, and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of CSM to be materially different from those expressed or implied by such forward-looking information, including but not limited to: transaction risks; risks relating to the completion of the transaction with B2Gold and the integration of the two companies following combination; general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral prices; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities, and as well as those risks identified under "Risk Factors" disclosure sections in the documents filed under the profile of CSM on SEDAR from time to time. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws. | |