Allana Potash Corp agrees to $137-million takeover bid from Israel Chemicals

Financial Post

Allana Potash Corp. agreed to a $137-million takeover bid from Israel Chemicals Ltd. because its chief executive said there was no other way to avoid massive dilution of shareholders.

Toronto-based Allana is in the same position as many other junior mining firms: it has a great project but no easy way to finance it in the current rough market conditions. The company’s Danakil project in Ethiopia is expected to cost US$642 million; by comparison, Allana had less than $8 million on its balance sheet at the end of January.

“Even if we could raise half of the money through debt, which is uncertain, we would still have to raise substantial amounts through equity,” Allana CEO Farhad Abasov said in an interview. “And that equity would come at a substantial discount to the current price.”

Allana did have options apart from an outright takeover. According to a source, the company was…

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