mgx

Russian stake sale pressures Mt Gibson



PETER KLINGER



Mt Gibson Iron was last night scrambling to work out whether its biggest shareholder, China’s APAC Resources, had picked up an additional 19.8 per cent stake from Russian billionaire Alisher Usmanov in a move that could trigger a $2.4 billion takeover bid for the WA iron ore producer.
Speculation is mounting that APAC or its partner Shougang are behind the purchase of Mr Usmanov’s stake.
APAC already owns 20.3 per cent of Mt Gibson. If it also bought Mr Usmanov’s stake to boost its holding to 40.1 per cent, Australian corporations law would most likely force APAC to launch a bid for the remaining 59.9 per cent of Mt Gibson.
However, if Mr Usmanov’s stake was picked up by Shougang or another Chinese group with tight links to the central government, such as Beijing Steel Industry United Mining Resources, it could force the Australian Securities & Investments Commission to launch an investigation into the buyer’s links to APAC to determine whether the buyer should be regarded as an APAC-related party.
Neither party would comment last night. Mt Gibson’s board has been locked in emergency meetings for the past two days. Managing director Luke Tonkin will come under pressure this morning, when Mt Gibson’s shares resume trading, to explain the upheaval on his share register.
Mt Gibson’s shares last traded at $2.62, more than treble their level a year ago. There was speculation Mr Usmanov may have sold his stake at $3 each, having given up hope of launching his own bid for Mt Gibson.
The share sale could become a test case for ASIC as it tries to stamp its mark on the increasing number of Chinese investments in Australia’s mining sector.
Corporations law dictates that a shareholder and related parties have to launch a full bid for a company if they take their combined stake above the 19.9 per cent takeover threshold. Exemptions such as the creep provision are unlikely to apply in an APACShougang investment case.
But the biggest challenge facing ASIC could be to work out to what extent Hong Kong-based APAC and Shougang, one of mainland China’s biggest steel producers, are related. It is unclear what jurisdiction ASIC would have in China to unravel the two companies’ corporate make-up.
ASIC ran into difficulties late last year during the $1.2 billion battle for Consolidated Minerals, which was eventually won by Ukrainian billionaire Gennadiy Bogolyubov.
A group of Ukrainian investors emerged as substantial shareholders of ConsMin, raising suspicions they were linked to Mr Bogolyubov. He denied the suspicions and there were no suggestions he had acted improperly, but it highlighted ASIC’s struggle to untangle complex webs of foreign-registered companies.