trading halt, page-12

Kagara to Sell 10.4% Stake in Company to Customer, Treacy Says

By Jesse Riseborough

Jan. 30 (Bloomberg) -- Kagara Ltd., an Australian zinc and copper producer, agreed to sell as much as a 10.4 percent stake in the company to a customer to bolster its balance sheet as a slump in metal prices erases earnings.

The customer may buy as many as 25 million shares to raise about A$10 million ($6.5 million), Joe Treacy, an executive of Perth-based Kagara, said today by phone. The buyer will be a new shareholder, he said, declining to say more.

Details of the share sale are being completed today and will be announced to the market on or before Feb. 3, Treacy said. Kagara, which was halted from trade this morning ahead of the sale, closed at 42 cents yesterday on the Australian stock exchange. The shares plunged 93 percent last year.

Kagara can sell as many as 25 million shares without seeking shareholder approval under Australian corporate regulations, Treacy said.

Last year’s 49 percent plunge in zinc and the 54 percent slump in copper prices means Kagara isn’t making a profit at current metal prices, it said yesterday. Kagara’s net income in the year ending June 30 dropped 28 percent to A$65 million.

Korea Zinc Co., a Kagara customer that owned a 14.1 percent in Kagara as of Nov. 7, isn’t the buyer, Treacy said. Korea Zinc is the world’s second-biggest zinc smelter.

To contact the reporter on this story: Jesse Riseborough in Melbourne at [email protected]

Last Updated: January 29, 2009 21:40 EST