OZ Minerals says it has received an alternative incomplete takeover proposal from its Chinese suitor that will provide a solution to its refinancing issues.
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31.03.2009 10:38 AM
OZ Minerals Ltd has received an alternative proposal from its Chinese suitor that could keep the company listed on the stock exchange holding the prized Prominent Hill mine in South Australia.
Minmetals Non-ferrous Metals Company Ltd has submitted a proposal to acquire all of OZ Minerals assets, except for Prominent Hill, the Martabe gold project in Indonesia and a portfolio of listed assets.
Minmetals' takeover proposal would leave OZ Minerals - which is negotiating an extension to refinance $1.3 billion of debt due on Tuesday - with the Prominent Hill copper and gold mine, and completely debt free.
"It does seem to be a real lifeline and gives OZ Minerals some real upside - it almost seems too good to be true," Ord Minnett analyst Peter Arden told AAP.
"Prominent Hill is at a stage where the company will get some benefit out of it, the operation doesn't really need much more money spent on it and (the proposal) certainly saves the bacon for OZ Minerals."
Treasurer Wayne Swan on Friday threatened to block a full takeover of OZ Minerals, citing national security concerns as Prominent Hill is in the Woomera Prohibited Area weapons testing range.
The federal government's decision came as OZ Minerals was negotiating an extension from its banks to refinance $1.3 billion of debt, which is crucial for the company to stay afloat.
The alternative proposal will have Minmetals pick up the Century and Rosebery zinc mines, in Queensland and Tasmania respectively, the Avebury nickel mine in Tasmania, which is on care and maintenance, and the Sepon copper and gold operation in Laos.
Minmetals originally offered 82.5 cents cash per OZ Minerals share, or $2.6 billion for the entire company and its assets, including Prominent Hill.
The original offer would have seen OZ Minerals delisted from the Australian stock exchange to become a subsidiary of Minmetals, while the alternative proposal provides the miner with an operating mine and the option to remain listed.
OZ Minerals executive general manager of business support Bruce Loveday said the two groups had been working on an alternative proposal since the federal government's decision on Friday.
"We are still working on it, we keep getting closer, but we are not quite there yet," Mr Loveday told AAP.
He said the Golden Grove polymetallic mine in Western Australia, which was originally slated for sale, could be included in the alternative Minmetals transaction.
OZ Minerals had been running a sale process for Martabe and Golden Grove to help pay down debt.
Minmetals spokesman Ian Smith said the alternative proposal would provide OZ Minerals with a "complete solution" to the company's refinancing issues.
"Minmetals believes it will bring stability to the operations which it wants to buy and brings greater certainty to OZ Minerals employees," Mr Smith said in a statement.
OZ Minerals said on Tuesday it expected negotiations with its banking syndicate on debt refinancing to be completed satisfactorily, in light of the alternative proposal.
"We are still confident that we will get an announcement out about an extension either tonight, or at the worst, first thing in the morning," Mr Loveday told AAP.
OZ Minerals shares are suspended, last trading at 55.5 cents.
OZL Price at posting:
$5.55 Sentiment: None Disclosure: Not Held
