Why Is Vigorous Resources Offering a 155% Premium for Rey Resources Shares?
Vigorous Resources has initiated an unconditional off-market takeover offer for all shares of Rey Resources at a 155% premium, with unanimous support from the Rey board. The bid, funded by a major shareholder loan, aims to provide immediate cash value to Rey shareholders and could lead to Rey's delisting from ASX.
- Unconditional $0.028 per share cash offer representing 155% premium
- Vigorous Resources holds 16.10% stake in Rey Resources
- Rey board unanimously recommends acceptance absent superior proposal
- Offer funded by $5 million loan from major shareholder Ms Wanyan Liu
- Potential compulsory acquisition and ASX delisting if 90% acceptance achieved
Background and Offer Details
On 8 July 2025, Vigorous Resources Pty Ltd announced an unconditional off-market takeover bid to acquire all ordinary shares of Rey Resources Limited (ASX – REY) at a cash price of $0.028 per share. This offer represents a substantial premium of 155% over Rey's last closing price and 160% over the 30-day volume weighted average price prior to the announcement.
Vigorous Resources currently owns 16.10% of Rey's shares and has positioned this bid as a compelling opportunity for shareholders to realise immediate value. The offer period opens on 9 July and closes on 11 August 2025, unless extended.
Board Support and Strategic Rationale
The Rey board has unanimously recommended shareholders accept the offer, provided no superior proposal emerges. The directors highlight the unconditional nature of the cash offer, which provides certainty amid Rey's ongoing operational challenges and market uncertainties. Rey is currently loss-making and carries significant debt, including over $22 million owed to Ms Wanyan Liu, a major shareholder and financier.
Vigorous Resources emphasizes that accepting the offer removes minority shareholder risks such as illiquidity and potential share price discounting. The bid also avoids the need for shareholders to navigate uncertain future performance or potential dilutive capital raises.
Funding and Ownership Structure
The offer is funded through a $5 million unsecured loan from Ms Wanyan Liu, who is also a significant lender to Rey Resources. Vigorous Resources was incorporated as a special purpose vehicle for this acquisition and is controlled by Dongmei Ye, a finance professional with extensive experience in resource sector projects.
Should the offer succeed in acquiring 90% or more of Rey shares, Vigorous Resources intends to proceed with compulsory acquisition of remaining shares and delist Rey from the ASX. The bidder has stated its intention to maintain Rey's current business operations and key management team post-acquisition.
Risks and Considerations
Vigorous Resources has not conducted due diligence on non-public Rey information, which introduces some uncertainty regarding potential contractual change of control provisions. Additionally, while the bidder considers the likelihood of competing offers low, shareholders should remain vigilant. Tax implications, including capital gains tax and foreign resident withholding, are detailed in the bidder's statement, with shareholders advised to seek professional advice.
The bid offers a clear exit for shareholders at a premium price, but the future of Rey as a listed entity hinges on acceptance levels and potential strategic decisions by Vigorous Resources.
Bottom Line?
As the offer period unfolds, Rey shareholders face a pivotal choice between immediate cash value and uncertain future prospects, with potential market and corporate shifts on the horizon.
Questions in the middle?
- Will any competing bids emerge to challenge Vigorous Resources’ offer?
- How will Vigorous Resources manage Rey’s significant debt and operational challenges post-acquisition?
- What are the implications for Rey’s existing contracts if change of control provisions are triggered?
