Nasdaq-listed Critical Metals Corporation and ASX-listed European Lithium have announced an amendment to the previously fixed share scheme transaction ratio under its proposed merger deal, with the companies having entered into a second deed to amend the scheme implementation deed of May 19.
The parties agreed to move from a fixed ratio to a floating ratio within a defined range so that movements in the Critical Metals share price between signing and implementation of the merger are shared equitably between both parties’ shareholders.
Critical Metals will still acquire 100% of the issued share capital of European Lithium by way of a court-approved scheme of arrangement, however, the previously fixed share scheme transaction ratio of 0.035 new Critical Metals shares has been amended to a floating ratio with a cap and collar – determined by reference to the average daily volume weighted average price (VWAP) of Critical Metals shares on Nasdaq over 20 consecutive trading days around the share scheme meeting.
Where the scheme VWAP is at or below the floor price of $8, the ratio is the maximum of 0.045 new Critical Metals shares.
Where the Scheme VWAP is at or above the ceiling price of $16, the ratio is the minimum of 0.025 new Critical Metals shares.
Between the floor and ceiling prices, the ratio moves on a straight-line basis between 0.045 and 0.025.
The parties agreed to move from a fixed ratio to a floating ratio within a defined range so that movements in the Critical Metals share price between signing and implementation of the merger are shared equitably between both companies’ shareholders.
Where the Critical Metals share price declines, the ratio adjusts upward and gives European Lithium shareholders a greater number of Critical Metals shares. Likely, where the Critical Metals share price rises, the ratio adjusts downwards to protect Critical Metals shareholders from dilution resulting from the transaction.
The cap and collar arrangement ultimately establishes outer bonds of that adjustment for both parties.
“The amended terms reflect the continued commitment of both companies to completing this combination in a way that protects shareholders on both sides equitably against short-term market volatility.
“The strategic rationale for bringing European Lithium and its assets fully into the Critical Metals group is unchanged, and we look forward to progressing toward implementation later this year,” says Critical Metals director Mike Hanson.
