firb exetnds 90 days, page-56

Corrected, with link: From Financial Times, London:

http://www.ft.com/cms/s/0/01d754ec-1785-11de-8c9d-0000779fd2ac.html

Australia extends review of Oz Minerals deal
By Peter Smith

Australia has extended its review of Beijing-based Minmetals’s A$2.6bn cash takeover of Oz Minerals by up to 90 days in a blow to the cash-strapped zinc and copper mining group’s efforts to secure a quick deal.

The decision by the Foreign Investment Review Board (FIRB) comes after the regulator also extended its review period of other Chinese investments in Australia, including Chinalco’s planned $19.5bn capital injection into Rio Tinto, and Hunan Valin Iron and Steel’s proposed A$1.2bn investment in Fortescue Metals.

Oz Minerals, which has warned of the threat of bankruptcy in the absence of a takeover, is locked in tough negotiations with its banking syndicate to extend a looming debt repayment. The mining group has debts of about A$1.3bn.

FIRB’s decision comes amid a lively political debate in Australia over Chinese investments in its resources sector. Barnaby Joyce, leader of the opposition National party in Australia’s upper house, the Senate, last week appeared in a privately-funded TV advertisment of his opposition to the Oz Minerals takeover.

The company said it was working with FIRB and understood the “requirement for proper process to be followed”.

“It is in the interests of Oz Minerals, its shareholders, employees and all of its stakeholders that the Minmetals application is determined as soon as possible,” it said.

Oz Minerals earlier in the day had it shares placed in a trading halt at 59 cents, which compares with Minmetals’ 82.5 cents a share cash offer. The large discount reflects the need for Oz Minerals to secure a further debt extension, the absence of regulatory clearance in Australia and final agreement by the Chinese.

“Oz Minerals is seeking an extension for the refinancing date for certain of its banking facilities until 15 September,” it added. That date would give it the flexibility to complete a deal with Minmetals via a scheme of arrangement.

Oz Minerals last month was able to extend a deadline to refinance its debts until the end of March. That initial extension was a precondition of Minmetals’ bid.

A successful takeover of Oz Minerals would provide a neat solution to the mining group’s seven-member banking syndicate, which would be fully repaid their debt.

The mining group last month reported a full-year loss of A$2.48bn, struck after asset write-downs of A$2.31bn. Excluding writedowns, the underlying loss was A$66.4m.

Oz Minerals has for months been struggling to sell assets, cut costs, raise commodity funding and refinance its debt to appease its financiers.