midwest says our shares worth at least 7

Our shares worth at least $A7: Midwest

Charlotte Dudley - MINING NEWS -
Wednesday, 19 March 2008

SHOW me the money, was the cry today from iron ore takeover target Midwest Corporation, as it fends off a hostile bid from Chinese steelmaker Sinosteel.

Actually, value, rather than simply money, was what Midwest chief executive Bryan Oliver was really after, telling a media conference the iron ore hopeful was worth at least $7 a share.

Sinosteel – which holds a 19.89% stake in Midwest and is a joint venture partner in some of the mineral company’s iron ore projects – is offering Midwest $5.60 a share, around $A1.2 billion.

The offer follows an earlier failed bid from Sinosteel also of $5.60.

Oliver told media Midwest could do better than Sino’s current bid, saying the board would give “very serious consideration” to any offer of $7 or more.

“The board has a duty to its shareholders to evaluate all bids and to assess whether those bids are fair value,” Oliver said.

“It’s fair to say that the board believes that it could ultimately deliver a value in excess of $7.”

Midwest shares are currently sitting on $5.57.

Oliver said many Midwest shareholders were in it for the long haul and would want an offer that matched their longer-term expectations.

“We believe this pipeline of projects can deliver a shareholder value in excess of $7,” Oliver said.

“For the whole of the company or control of the company, there needs to be some kind of premium on that.”

Oliver said he was puzzled about Sino’s decision to return for a second bid at the same offer price and suggested a number of situations could play out.

“Well I’m not sure why they did it, quite frankly [offer the same bid price].

“It either says that they’re supremely confident that they’ll get over the line, but really the board, and I would expect the long-term investors in this company, probably don’t agree with that otherwise they would take up the bid or would’ve accepted it previously at the $5.60.

“So that then leaves you with a number of circumstances in terms of potential for a company that has either Sino holding a minority interest – but a significant minority interest – or just a controlling interest, and if they just have that, a significant conflict of interest going forward with intrinsic value negotiations between the company and Sino.”

Oliver confirmed Midwest was open to negotiating “fair value” offers from other parties.

“If there were interested parties we definitely would, because the objective of the company and the board is to deliver maximum value for shareholders and if that required us to do this we would,” Oliver said.

Shares in Midwest closed the day 13c higher at $5.65.