Australia

• Pioneer Credit Limited (ASX:PNC) was founded in 2009 and listed on the ASX in 2014.
• The company has grown to be one of the leading acquirers and managers of impaired credit in Australia by; maintaining strong customer engagement, an unblemished compliance record with ASIC, consistently good Net Promoter Score from customers and strong relationships with Australia’s largest bank and non-bank lenders.
• PNC currently purchases debt from 18 different vendor partners with long-term partnership purchasing arrangements in place with Commonwealth Bank of Australia (ASX:CBA). 

• ADX is issuing A$1.5 mm of loan notes with a term of 18 months.
• A$1.0 mm of the loan notes carry an interest rate of 8% per annum with 30 mm options with an exercise price of A$0.01 per share and 30 mm options with an exercise price of A$0.014 per share.
• ADX expects to secure farm-in partners for some of its Upper Austrian drilling projects during the summer.

Recent months have been eventful for Recce Pharmaceuticals, with the company presenting its Q323 operational update and announcing ethics approval in April 2023 to commence Phase I/II clinical trials in healthy volunteers for the intravenous (IV) formulation of its lead broad-spectrum synthetic polymer anti-infective compound, RECCE 327 (R327), using a more rapid infusion rate. The Phase I part of the study will assess faster infusion rates of R327 in c 16 healthy participants across three cohorts, with the first cohort recently having successfully completed a 2,500mg R327 dose. A Phase II efficacy study in patients with uncomplicated or recurrent urinary tract infections (UTIs) is expected to commence in H2 CY23. While several potential value inflection points may arise in the next 12 months, obtaining financing is likely to be a near-term strategic priority given the current cash at hand (A$4.6m at 28 April 2023). We value Recce at A$535.6m, up from A$497.4m previously.

• We forecast 22 changes across the ASX50 Index, ASX100 Index, S&P/ASX 200 (AS51 INDEX) and ASX300 Index at the September rebalance.
• Some of the changes are high probability while others are close to cutoffs. The impact of passive trading will be pretty large on a lot of stocks.
• Short interest on the potential deletes indicates some pre-positioning but there should still be a fair bit more to do.

• Back in October 2022, Costa Group (CGC AU), one of Australia’s largest fresh fruit and vegetable producers, was understood to have been approached by its former major shareholder, Paine Schwartz.
• This was discussed in Costa Group’s Low-Hanging Fruit: Paine Schwartz Renews Interest. At the time, media reports speculated Paine Schwartz had no current intention of making a takeover bid.
• Last week, Paine Schwartz made an A$3.50/share NBIO by way of a Scheme. Paine Schwartz currently holds 14.84%.

Paradigm has announced the completion of patient recruitment for stage one (dose selection) of its pivotal Phase III trial, PARA_OA_002, a multi-centre (US/Australia/UK/EU/Canada), two-stage, adaptive, randomised, double-blind, placebo-controlled study to assess injectable pentosan polysulfate (iPPS) in patients with knee osteoarthritis (kOA) pain. Paradigm has efficiently recruited participants for the trial through various initiatives, such as through its partnership with NFL Alumni Health. Management expects stage one to be complete in Q3 CY23, and for stage two to commence with the most effective dose later in H2 CY23. The selected dose will also be used in the initiation of the separate confirmatory Phase III trial in H2 CY23. These events represent key milestones for Paradigm, in our view.

• Costa Group Holdings (CGC AU)  has disclosed an indicative non-binding proposal from Paine Schwartz Partners at A$3.50 per share (A$3.54 including potential interim dividend).
• The Board has granted eight weeks of non-exclusive due diligence. The due diligence, which started on 6 June, ends on 1 August.
• The offer price is attractive compared to peer multiples and historical trading ranges. At the current price of A$3.35, the gross spread is 4.5% (5.7% including dividend).

• One of main criteria for ACCC to allow ANZ’s takeover of Suncorp centers around competition, will it worsen as a result
• There are 8 banks in Australia with over 100 branches, if the takeover is allowed, this puts the 127 Suncorp branches into the 668 branch stable of ANZ
• There is plenty of expert and public testimony that such a merger would see less competition especially in SME and agribusiness loans, and possibly limit physical access to banking

• Back on the 28 March, United Malt Group Ltd (UMG AU) entered into a NBIO with Malteries Soufflet at an Offer Price of $5.00/share, a 45.3% premium to undisturbed.
• After a lengthy due diligence process, the two companies have now entered into a binding agreement of A$5.00/share, by way of a Scheme. UMG’s board has unanimously recommended the bid.
• The Offer is subject to FIRB and other regulatory approvals. Malteries Soufflet and UMG are the second and fourth-largest maltsters in the world.

• Musgrave Minerals (MGV AU) has recommended a cash and scrip off-market takeover offer from Ramelius Resources (RMS AU) at 1 RMS share for every 4.21 MGV shares + A$0.04 cash.
• RMS’ offer is attractive compared to adjusted exchange ratios and peer multiples. The offer, which has a 50.1% minimum acceptance condition, has secured commitments from shareholders representing 12.13% of shares.
• At the last close, RMS’ offer is 14.9% higher than Westgold Resources (WGX AU)’s rival scrip off-market takeover offer of 1 WGX share for every 5.37 MGV shares.

• Costa Group Holdings (CGC AU) listed in 2015 when Paine & Partners sold 40% of its stake in the company.
• Paine Schwartz Partners bought a 13.84% stake last year, increased it in March, and has now made an offer to buy out the remaining shares at A$3.5/share in cash.
• Short interest was over nearly 11 days of ADV to cover and short covering could take the stock higher sooner. This is a buy here.

• The AFR reports that United Malt Group Ltd (UMG AU) has received a binding offer from Malteries Soufflet at A$5.00 per share, a 13.6% premium to the last close price.
• The high spread reflected the risk of a no-deal or price cut due to the weak 1HFY23 results and lack of updates since the end of the 10-week due diligence.
• The offer is conditional on shareholders and FIRB approval. Shareholders will be supportive and breathe a sigh of relief at receiving a binding offer with unchanged terms. 

• The gaming equipment and systems leader offers line of new Dragon themed slot machines for upcoming Year of the Dragon as spear point of expanded Asian goals.
• Acquisition of Israel’s NeoGames at US$1b follows failed bid last year to acquire Playtech. Move will strengthen digital footprint for sports betting and iLottery.
• We have been bullish for five years on ALL as its shares have outperformed the market.

• Cannindah Resources Ltd (ASX:CAE) is developing three copper-gold prospects in central Queensland including the Mt Cannindah project which has an existing JORC estimate currently being extended with the company’s drilling programme.
• The company has a long history with the Mt Cannindah project, having previously held it as Planet Metals on a farm- in arrangement with Drummond Gold before taking full control of the project in 2014.
• Since then, the company has added to its asset base with the Piccadilly and Percy Marlow prospects near Charters Towers. 

• Hot Chili Limited (ASX:HCH) is a copper explorer with an advanced portfolio of low altitude, porphyry copper-gold projects in the Costa Fuego district of northern Chile.
• The company listed in 2010 on the ASX and has spent the past 12 years acquiring, developing and proving up the resources at its Productora, San Antonio, Cortadera and Valentina projects in Costa Fuego as well as securing access to water, power and mining infrastructure surface rights which will hasten the development approvals process.
• In that time, Hot Chili has increased its indicated resource by 1,500% to 3.41Mt Cu Eq. The company has announced its preliminary economic assessment (PEA) which estimates a post-tax Net Present Value (NPV) of US$1.1bn using a copper price of US$3.85/lb and a gold price of US$1,750/oz. 

• Redox (RDX AU), a chemical and ingredients distributor, raised around US$270m in its Australia IPO. The stock will begin to trade on 3rd July 2023.
• In 2022 it was ranked as the largest chemicals and ingredients distributor in Australia, as well as the 13th largest in the Asia Pacific region and the 35th largest worldwide
• We have looked at the company’s past performance in our previous note, in this note we will talk about the updates since then and the trading dynamics.

• Redox (RDX AU), a leading chemical and ingredients distributor, is looking to raise A$402m (US$268m) in its IPO and is expected to start trading on the ASX on 3 July.
• With the float expected to be over 30%, the stock is eligible for inclusion in the S&P/ASX indices but limited trading history could only mean S&P/ASX300 inclusion in March 2024.
• With 70% of the shares subject to lock-up arrangements, buying from ASX300 passive trackers will be small and there will be limited inclusion in other indices too.