Australian diversified mining company, Oz Minerals, announced on Monday that it has entered into an agreement with China's Minmetals Nonferrous Metals Company, to sell all its outstanding shares for 82,5c a share, or about A$2,6-billion.
CEO and MD Andrew Michelmore said that following the rapid decline in commodity prices in late 2008, Oz Minerals had been working with its financiers to progress various funding options to bring down its debt, and increase shareholder value.
“This offer can resolve investor uncertainty. The offer also provides Oz Minerals shareholders with a substantial premium to our last trade share price, and the certainty of cash consideration.”
Under the agreement, Minmentals would repay Oz Minerals’ A$1.2-billion debt in full facilities, which would resolve the company’s current financial crisis.
Oz Minerals was seeking to refinance or extend its current debt facilities by February 27, and would be requesting its lending banks to provide interim support to enable the company to complete the proposed transaction with Minmetals. The receipt of the lending banks’ interim support was a key condition of the Minmetals offer.
Oz Minerals is also to proceed with the previously-announced asset sale programme of the Martabe project in Indonesia, and Golden Grove operation in Western Australia, to address its short-term cash requirements, and to allow the company to work with its banking syndicate towards extending or refinancing its banking facilities.
Besides paying 82,5c a share in cash, Minmetals also has the option to allow early redemption, or otherwise acquire, Oz Minerals’ 5.25% outstanding 2012 convertible bonds.
The offer would be financed by Minmetals from existing cash resources and bank debts, and would constitute Minmetals largest overseas transaction to date. Minmetals intends to maintain all of Oz Minerals’ operations.
“Oz Minerals has a number of assets that complement Minmetals nonferrous asset portfolio. Minmetals has significant operations on five continents, including Australia, Europe, North America, and South America,” said Minmetals chairperson Zhou Zhongshu.
Minmetals aimed to conclude its due diligence by February 23, and the agreement is still subject to approval from Oz Minerals shareholders, as well as the relevant governing bodies, including the Australian Foreign Investment Review Board.
Regulatory approvals were expected by April, and the scheme was expected to become effective in late May.
“The board has determined that Minmetals’ cash proposal is in the best interest of Oz Minerals’ shareholders and believes this is the best outcome for shareholders compared with any of the other options available to us. It provides shareholders with a significant premium to the last price at which our shares traded. It is also significantly higher than the price at which we believe Oz Minerals shares would trade in the absence of the offer,” said Oz Minerals chairperson Barry Cusack.
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