oz minerals rejects refinancing proposal, rfc

OZ Minerals Rejects Refinancing Proposal, RFC Says (Update1)
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By Jason Scott

June 8 (Bloomberg) -- OZ Minerals Ltd. rejected a $1.2 billion recapitalization plan prepared by RFC Group, Royal Bank of Canada and other institutions and aims to sell assets to China Minmetals Group, an RFC executive said.

“The OZ Minerals board notified the consortium that it would not recommend the recapitalization proposal over its decision to sell off key assets to China Minmetals,” RFC Corporate Finance Managing Director Rob Adamson said in an e- mailed statement today. The group had extended the deadline for the Melbourne-based company to accept the offer to June 11, when shareholders will vote on the Minmetals deal.

OZ Minerals, formed by the merger of Oxiana Ltd. and Zinifex Ltd. last year, needs to pay about $1.1 billion of debt after a rout in commodity prices. Minmetals, China’s biggest metals trader, is seeking to complete the purchase of mines from OZ Minerals next month, giving it control of the world’s second- biggest zinc mine and supplies of copper, gold and nickel.

“Should shareholders of OZ Minerals reject the Minmetals offer, the OZ Minerals board will still have the option of pursuing our recapitalization proposal,” Adamson said in the statement. “We believe our proposal provides the OZ Minerals board with the value, certainty and timing the company needs.” Some of OZ Minerals’s largest shareholders have indicated they will support RFC’s proposal, he said.

Market Shut

Calls to Matthew Foran, a spokesman for Melbourne-based OZ Minerals, weren’t answered earlier today, a public holiday in Australia’s eastern states. The stock market is closed today.

OZ Minerals rose 1.7 percent to 88.5 cents at the June 5 close on the Australian stock exchange. The stock has risen 61 percent this year, giving the company a market value of A$2.76 billion ($2.2 billion).

OZ Minerals agreed to the sale in April after the Australian government rejected a full takeover bid by Minmetals. It owns the A$1.2 billion Prominent Hill copper mine in South Australia state.

The Oz Minerals board rejected the counter offer, put together by about 20 institutions, to state-owned China Minmetals’s $1.2 billion bid because it undervalued the Australian mining company, the Sydney Morning Herald reported earlier today on its Web site. Oz Minerals is expected to issue a statement tomorrow and Minmetals’s proposal will be put to a shareholder vote, it said.

Production Forecast

Output from Prominent Hill started in February and the company has forecast production of as much as 100,000 metric tons of copper and 70,000 ounces of gold this year. The mine will be the company’s only source of revenue should the Minmetals sale proceed.

Minmetals was blocked from buying Prominent Hill by Australian Treasurer Wayne Swan in March because of its proximity to the Woomera weapons testing range. Woomera, about the size of England, is the largest land-locked missile-testing range in the world and previously included testing for nuclear weapons, according to its Web site.

Oz Minerals said June 4 it hadn’t received a better refinancing proposal than the Minmetals plan.

To contact the reporter on this story: Jason Scott in Perth at [email protected].