urgent letter to ozl directors, page-9

Great letters Guys, and as promised dodds, here is the one I sent early this morning, recieved by Richard at 7.30 am and no reply as yet.

Dear Bruce,

Firstly congratulations on your position as acting CEO, I don’t envy your task as I think the next two weeks will be challenging for all concerned.

I am a long term OZ minerals and Oxiana shareholder, and have been concerned about the way the OZ management and board have handled the challenges thrown up by the GFC and fall in metals prices, and the proposed sale of what was to be all of our company, and now is the majority of our company. So concerned in fact, that I actually came into head office last year and pleaded the case for a rights issue to Mathew Foran and so concerned that I organized a group of like minded concerned shareholders into a shareholder action group.

As you are aware, shareholders are being asked to sell most of our company, for a price that even the independent expert agrees is below even their lowest valuations, and if we agree to this sale, the CEO and some management and board will take high paying, secured positions with the acquiring company. There is obviously a conflict of interest concern over this transaction, whether it is real or perceived, shareholders need a transparent, open, honest and current update on what is really happening and why it is happening. This I believe should be conveyed to the market at the first opportunity, as shareholder will need this information to make an informed decision regarding the asset sales.

Some of the questions needing answering are.

Why are the banks not prepared to come back and talk when we now see the credit crisis is easing, commodity prices rising and Prominent Hill now operating to plan.

The reason we are selling these assets is because the banks have refused to advance long term funding to OZ. Why have the banks refused this funding, we have been told about the foreign banks and the supposed one local bank not wanting to rollover, that was why we were selling some assets to pay them off, but then apparently we were told ‘all banks just wanted out’. Why will no bank apparently now advance long term funding to OZ, surely there has to be a level of borrowings that a bank/s would be happy to lend to, whether it be AU$100million or AU$500million, if this is the case shareholders need to know and if not, we need to know why banks simply wont deal with OZ, the third largest diversified miner in Australia, when other companies are able to secure funding.

Why are we going to sell all of these significant assets, at fire sale prices, when shareholders, the actual owners of these assets, have not been asked to contribute to a rights issue. Its been over five months since I spoke to Mathew Foran about this issue, I have read the explanations of time, certainty and dilution, well you have had plenty of time, certainty, there is never certainty, even the Minmetals offer was conditional, and dilution, we are being massively diluted by having to sell most of our assets off, at bottom of the market prices.

Many, many companies have strengthened their balance sheet with rights issues over the last few months, what’s so different about OZ minerals, why can’t OZ do the same NOW, instead of this fire sale of assets.

With the major fluctuations in exchange rates (AU$/US$ greater than 15% since the explanatory booklet was released) and the rise in commodity prices, what is OZ minerals true financial position and what would be the projected earnings and cash flows for the next financial year be, using current commodity prices and exchange rates. What is our current cash position and what are our current debts in AU$ and US$. Also what is the rise of the Australian dollar against the US dollar doing to our projected surplus cash pile, should the yes vote get up at the AGM.

Andrew Michelmore was quoted on Friday as saying “We’ve had various proposals come forward, but unlike the Minmetals deal, they don’t provide a total solution for our financial position”. So, do we need a ‘total solution’ before giving any serious consideration to alternate proposals, because from my reading of it, Grant Samuel in giving its conditional blessing to the offer wrote this.

Grant Samuel’s opinion on the Proposal could change if it became apparent that OZ Minerals
no longer faced any real risk of insolvency.


In Grant Samuel’s view the Consideration is below the underlying value of the Sale Assets. Grant
Samuel’s opinion that the Proposal is nevertheless in shareholders’ best interests reflects OZ
Minerals’ urgent need to address its financing issues and the risk of insolvency if this is not
achieved. It is possible that circumstances could change such that OZ Minerals no longer faced any
real risk of insolvency. This could result if some alternative proposal (satisfactory to OZ Minerals’
bankers) was put forward that would generate cash and allow a significant debt reduction (for
example, through a more limited asset sale program and/or an equity raising). In these
circumstances Grant Samuel’s opinion that the Proposal is in shareholders’ best interests could
change.

A ‘total solution’ and a ‘significant debt reduction’ are different things, if the board has become aware of a proposal/s, or offer/s that takes away the REAL RISK of insolvency, then shouldn’t Grant Samuel be advised, and be given the opportunity to change their opinion of the Minmetals proposal.

What steps have management and board taken to alleviate the real risk of a conflict of interest between themselves and shareholders, should we not appoint an independent party to oversee and disclose (if deemed appropriate) any unsolicited offers or proposals or combinations thereof that could be superior to the Minmetals proposal. How can the management and board act in shareholders best interest, when their decisions might be detrimental to their own futures or careers.



As I said earlier I believe that all shareholders should know the answers to these questions, to be able to make a truly informed decision about such a major disposal of OZ minerals assets, to a company that will be managed by, and benefit, current OZ minerals management and staff.


Thank you for taking the time to read this email and as I will be posting these questions online, I will also post your reply online as well, I would appreciate a reply and answers to these questions, even if you decide not to release it to the market.


Yours sincerely Grant

cheers grant

the above is opinion only and written without prejudice