Frontier Pacific agrees to sweetened Eldorado bid

By Cameron French

TORONTO (Reuters) - Frontier Pacific Mining Corp has agreed to a sweetened bid from Eldorado Gold Corp , the companies said on Wednesday, paving the way for the takeover deal to proceed.

In addition to the original offer of 0.122 Eldorado common shares for each Frontier share -- worth about C$170 million ($165 million) at current prices -- shareholders will also receive one exchange receipt per Frontier share, which entitles them to 0.008 of an Eldorado share.

The exchange receipt is conditional on the Greek Joint Ministerial Council approving environmental terms for Frontier's Perama Hill gold project by July 1, 2009. Perama is Frontier's main asset.

Perama, located in northeastern Greece, has an indicated resource of 1.36 million ounces.

Factoring in the exchange receipt, Eldorado's offer values each Frontier share at C$1.09, and the company at C$179 million, according to Reuters data.

Frontier's shares were up 2 Canadian cent at C$1.02 on the TSX Venture Exchange, while Eldorado was down 3 Canadian cents at C$8.44 on the Toronto Stock Exchange.

Kerry Smith, an analyst at Haywood Securities in Toronto, said the market was not factoring the exchange receipts into Frontier's share price.

"That's a contingent payment, so people will discount that," he said.

Frontier had initially rejected Eldorado's offer when it was announced in April, saying it undervalued Perama. But the company softened its tone this week after failing to drum up additional offers.

Frontier's directors and officers have entered into lock-up agreements to tender their shares, meaning 41 percent of Frontier's shares have now been committed.

The offer, which was to expire on Tuesday, has been extended to July 2.

($1=$1.02 Canadian)

(Reporting by Cameron French; editing by Rob Wilson)