Can Forrest fund the Forsys acquisition?

Up until the news of the delay, GFI’s proposed acquisition had been one of the few feel good stories outside of gold in the mining world over the last few months.

Forsys’ shares had closed as low as $2.50 just before the $7.00 per share offer from GFI was announced on Nov. 14 of last year.

And while its stock price had marched towards the offering price – they closed at $6.35 just three days earlier on March 10 – the news of the delay sent them back down, shaving 30% or $1.55 off their price on March 13, leaving them to close at $3.70 on 5.9 million shares traded.

Forsys says while the new closing date for the offer has not been finalized, it will not be later than July 31. The deal was set to close on March 18. Forsys says the purchase will remain the same.

The extension, however, doesn’t come without a cost to GFI. If the deal isn’t consummated the break fee GFI would have to pay Forsys goes up to $20 million from $11.4 million, with GFI having to provide security for the entire new amount by the end of March.

If GFI cannot demonstrate that it will be able to abide by the new plan by the end of March, Forsys says it will collect the existing reverse break fee of $11.4 million.

Forsys says GFI has told it that it is still committed to the transaction but given the tough economic climate needed more time to complete the financing.