Houlihan Lokey Advises Atlas Iron

Houlihan Lokey is pleased to announce the successful takeover of Atlas Iron Ltd. (Atlas) by Redstone Corporation Pty Ltd., a wholly owned subsidiary of Hancock Prospecting Pty Ltd. (Hancock) for A$472 million in October 2018.

Atlas is an ASX-listed junior iron ore miner producing from the Pilbara region of Western Australia. In fiscal 2018, it shipped 9.2 million wet metric tonnes of iron ore and lost A$75 million on a pre-impairment and A$167 million on a post-impairment basis.

Hancock is the private investment vehicle of Gina Rinehart, one of Australia's wealthiest people. It operates a diversified business primarily in the mining sector in Australia. In fiscal 2017, Hancock generated revenue of A$4.5 billion with cash and cash equivalents of A$3.9 billion.

Hancock was successful in acquiring Atlas following a three-way contested takeover battle including Mineral Resources and Fortescue Metals. Hancock's final offer of 4.6 cents per share represented a 142% premium over the 1.9 cent Atlas share price prior to the first offer tabled by Mineral Resources in April 2018.

Houlihan Lokey's journey with Atlas began in 2015 when we represented creditors on the restructuring of Atlas' US$267 million Term Loan B facility. The restructuring resulted in creditors owning 70% of Atlas' common equity. Subsequent to the restructuring, in 2017 Houlihan Lokey conducted a strategic review with a view to finding the most appropriate long-term owner of Atlas' operations.

Atlas shareholders, including credit funds, received a substantial equity check at a large premium. In addition, Hancock has guaranteed all remaining outstanding debt. Without the transaction, Atlas was facing substantial future uncertainty given the prevailing iron ore price and its declining production profile.

Houlihan Lokey served as the exclusive financial advisor to Atlas and assisted in initiating, structuring, and negotiating the transaction. 

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