Perilya spills beans on FIRB approval processJamie Freed March 6, 2009
BROKEN Hill miner Perilya yesterday shed some light on the approval process for foreign investment in a presentation at the Sydney Mining Club.
The Foreign Investment Review Board (FIRB) last month approved Chinese smelter Zhongjin's request to take a 50.1 per cent stake in the financially distressed company in return for a $45.5 million cash injection.
Perilya boss Paul Arndt said Perilya was asked if it had any other means available to raise the funds. He said the company replied that in the absence of the Zhongjin deal, it would have had to shut its loss-making mining operation. "Our capacity to raise capital in this sort of time frame just wasn't there," he said.
In contrast, Rio has admitted it could raise up to $US10 billion ($A15.5 billion) — enough to meet a debt repayment due this year — through a deeply discounted rights issue.
It could raise further cash by selling assets, albeit not necessarily at as high a price as Chinalco is willing to pay.
Mr Arndt said the issue of control was also important to FIRB, since Zhongjin wanted a majority stake in Perilya to consolidate its accounts and ease internal Chinese approvals for it to invest further funds in the Australian miner.
"We had quite a debate with FIRB as to what control meant," he said. "(We said) at 25 per cent to 30 per cent anyone would have control of us. We had quite an open register."
Chinalco is proposing to take an 18 per cent interest in Rio and to appoint two directors to the miner's board. The rest of Rio's register is dominated by institutions in Britain, the US and Australia.
Source: The Age
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