Sierra Metals (TSX: SMT) evidently is highly desired by Alpayana S.A.C., a private Peruvian mining operator that has been working to acquire the company since December. The private company has increased its offer to acquire Sierra, while outlining to shareholders a number of issues faced by Sierra.
The latest offer amounts to $1.11 per share in cash, which is a 31% increase over the $0.85 per share offer made by the company initially on December 16. The figure is a premium of roughly 64% to the 30-day volume weighted average price of Sierra on December 13, the last trading day before Alpayana announced its initial offer. The new offer is also a 41% premium to yesterday’s close.
While making the offer, Alpayana outlined a number of issues currently being faced by Sierra, including a large working capital shortfall, expensive debt, and an unpaid US$56.1 million obligation to a publicly traded subsidiary. Alpayana also highlighted the recent restatement of Sierra’s financial statements, which resulted in net income being reduced from $8.7 million to $5.0 million for the first nine months of 2024, while cost of sales increased by $5.3 million and inventories dropped $7.8 million.
If the bid is successful and Alpayana secures more than 50% of the outstanding shares of Sierra, a local public tender will be issued for the acquisition of Corono, which is Sierra’s public entity. Alpayana is currently a minority investment of the shareholders of Alpayana, which appears to be part of the reason behind the unsolicited offer to acquire Sierra.
Alpayana has disclosed that it will not revoke its offer, provided at least 50% of Sierra’s shares are tendered. The offer will remain in place until 5:00 PM EST on April 24, 2025.
Sierra Metals last traded at $0.79 on the TSX.
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