Atlas Iron : Conditional Increase to Hancock Offer

13 September 2018

Conditional increase to Hancock Offer

Atlas Iron Limited (Atlas) (ASX: AGO) refers to the off-market takeover bid for all the issued shares of Atlas by Hancock Prospecting Pty Ltd ACN 008 676 417 through its wholly-owned subsidiary, Redstone Corporation Pty Ltd ACN 625 680 159 (Redstone)(Hancock Offer).

Redstone has stated that its Offer Price will increase to 4.45 cents per Atlas share if Redstone's voting power increases to 87% or more during the Offer Period (Condition). If the Condition is satisfied, Redstone will also pay an additional 0.25 cents per Atlas share to shareholders who accepted the Hancock Offer prior to any change in the Offer Price. If the Condition is not satisfied, the Offer Price will not increase.

The Hancock Offer has been extended until 5.00pm (Perth time) on 21 September 2018.

Atlas lodged its Target's Statement in relation to the Hancock Offer with ASX on 16 July 2018. The Target's Statement includes a report from an independent expert, which concludes that the Hancock Offer is fair and reasonable to Atlas shareholders.

Redstone advises that its voting power in Atlas has increased to 76.3%. As foreshadowed in the Target's Statement and subsequently announced by Atlas, the change in the control of Atlas caused by shareholders accepting the Hancock Offer is an event of default which gives lenders under the Term Loan B Facility the option to accelerate repayment of the debt. If the lenders choose to accelerate repayment of the debt, the debt will immediately become due and payable (see section 2.1 of the Target's Statement for further information).

The lenders have not chosen to accelerate Atlas' repayment obligations at this stage.

Redstone has stated in its Bidder's Statement that if Atlas requires funding support to repay the Term Loan B Facility, Redstone will offer to make available to Atlas (by way of a loan facility) such amount as may be necessary to enable Atlas to meet its repayment obligation in relation to the Term Loan B Facility, or will offer to step-in to the Term Loan B Facility (by way of acquiring that debt from the lenders under the Term Loan B Facility). However, terms for the provision of such funding to Atlas have not been agreed and there is a risk such agreement may not eventuate.

Discussions between Atlas, Redstone and the Term Loan B lenders in regards to these matters continue. In the event lenders under the Term Loan B Facility demand repayment and sufficient funding is not available promptly (either from Redstone or otherwise) and Atlas is unable to immediately repay the Term Loan B Facility, Atlas may no longer be a going concern.

To accept the Hancock Offer, shareholders must follow the instructions in section 8.3 of the Bidder's Statement. Acceptances must be received by 21 September 2018, subject to any further extension. Redstone advises that it will pay shareholders who accept the Hancock Offer within seven days of their acceptance (see section 8.16 of the Bidder's Statement for further information).

Redstone has opened an information line to assist Atlas shareholders with queries about how to accept the Hancock Offer which can be contacted on 1300 853 598 for Australian callers or +61 1300 853 598 for international callers.

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