Candy faces the threat of court over Metals bid

By Simon Watkins for The Mail on Sunday
Updated: 05:56 EDT, 25 October 2010

Property tycoon Christian Candy has been threatened with an injunction by shareholders of Metals Exploration who are trying to block his £35m takeover of the gold mining group.

Christian Candy: Accusers beieve Candy is bending rules.

The controversial deal, highlighted by Financial Mail in August, has enraged some, who believe Candy is bending City rules to buy the group on the cheap.

The Takeover Panel has already told Candy to extend the deadline for his bid indefinitely while it carries out a review of the deal.

But a group of investors may this week seek an injunction in the High Court in London blocking the takeover and forcing Candy and his partners to reduce their stake.

'There is a minority of shareholders who are not happy with the proposed takeover,' Candy said yesterday.

'They have a right to be heard, but this is a decision for the Takeover Panel and not for the High Courts and we will abide by whatever the Takeover Panel decides.'

Candy is bidding for Metals Exploration, which owns a gold mine in the Philippines, through his Solomon Capital company. Solomon has already had its offer of 13p a share accepted by several leading shareholders, including, crucially, Reef Securities.

Reef is run by Steven Smith, a longstanding business partner of Candy and his brother, Nick. Their Candy & Candy group is a leading player in the luxury property market. Smith is also now running the takeover bid for Metals Exploration.

Some smaller shareholders argue that Christian Candy and Smith were acting in partnership over the mining group - a 'concert party' in City jargon - for several months before the bid was made.

Under City rules, any bid made by existing shareholders must be priced at least as high as the highest price that a shareholder has paid for shares in the previous 12 months. Reef Securities paid up to 16.5p for shares in the months before the bid was made.

If the shareholders can convince the authorities that Reef was, in practice, already in concert with Candy when it paid that price, the whole takeover offer must be set at 16.5p or more. This would add £10m to the offer price.

The bid for Metals Exploration is the first time Candy has shown an interest in owning or managing a mining group. It is thought he plans to buy out shareholders in Britain and refloat the business in Hong Kong.

Metals Exploration has identified reserves of 780,000 ounces at its mine in the Philippines, worth hundreds of millions of pounds at current prices. But the site is remote and it is estimated it will require an investment of £100m before mining proper can begin.

The Takeover Panel, which is thought to be aware of the injunction threat, declined to comment.