ozl investors told to vote for china deal

OZ Minerals has recommended its shareholders vote in favour of its deal with China Minmetals to save it from administration.

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Releasing documents today that outline the $US1.2 billion ($1.6 billion) asset sale, OZ chairman Barry Cusack said if the transaction were not approved, OZ Minerals might not be successful in refinancing its debt, which could potentially lead to it being unable to continue operating as a going concern and being placed into voluntary administration or receivership.

Mr Cusack also said in a letter to shareholders that no alternative superior proposal had emerged since the original takeover bid by Minmetals was launched on February 16. The original full takeover bid had to be revised down to an asset sale, because Treasurer Wayne Swan knocked back the first offer on national security grounds.

OZ will now be left with Prominent Hill as its only operating asset.

In its explanatory notes advising shareholders to vote in favour of the transaction at an annual meeting on June 11, OZ outlined its future growth plans, once the deal is complete.

“The company’s strategic focus going forward will be on organic growth opportunities that build upon its current platform of assets and complement existing operations,” OZ said.

“Although OZ Minerals may consider expansion into other areas, including other base metals and other countries where appropriate opportunities arise.”

The report also added that Grant Samuel’s independent expert report on the deal concluded that Minmetals’ offer was in the best interests of OZ Minerals shareholders in the absence of a superior proposal.

“This conclusion is based on OZ Minerals’ current financial position and the lack of viable alternatives, and is despite the price to be received by OZ Minerals for the assets being below the independent expert’s valuation range for those assets,” OZ said.

OZ said that following the completion of the transaction, the proceeds from the sale would be used to repay outstanding bank debt facilities of approximately $1 billion, meet delayed tax payments to the Australian Taxation Office and meet transaction costs and bank fees.

OZ said the total amount of costs paid in connection with the repayment and extensions of the debt facilities was about $94.5 million.