OZ Minerals has rejected an alternative proposal to solve the...

OZ Minerals has rejected an alternative proposal to solve the miner's debt problems and will push ahead with its China Minmetals deal.

Australian investment and advisory group RFC Corporate Finance and RBC Capital Markets said yesterday their $US1.2 billion ($1.5bn) recapitalisation offer, submitted to the OZ board on Friday, had been declined.

It is understood the board considered the new proposal at the weekend and there was speculation Minmetals had been asked to increase its offer to secure the asset sale.

But a spokesman for RFC and RBC said the groups had been informed by OZ that the company did not wish to pursue the proposal, as the Minmetals offer was the best option for shareholders.

Minmetals' $US1.2bn rescue package of OZ Minerals, which involves the state-owned company buying all the miner's assets except its flagship Prominent Hill mine, has passed all regulatory hurdles and is awaiting a shareholder vote on Thursday.

OZ told the market on Friday it had received unsolicited non-binding and indicative proposals on a potential recapitalisation of OZ Minerals, but it did not consider any new offer superior to its asset sale to Minmetals.

RFC managing director Rob Adamson and RBC Capital Markets chief Richard Barker said in a joint statement on Friday their proposal was "clearly superior on value and provides certainty to OZ Minerals".

The proposal comprises a $US1bn equity and bond raising and a $US200 million working capital facility.

RFC and RBC said several of OZ Minerals' largest shareholders were strongly supportive of the recapitalisation proposal.

The plan includes a $US220m placement of shares at 60c each and the issuing of a $US450m five-year secured bond with an 8per cent coupon convertible at 90c a share, and a $US330m two-year subordinated bond with a 2per cent coupon convertible at 65c a share.

The working capital facility would be for up to $US200m and there would be an entitlement offer to all OZ Minerals shareholders to raise $300m at 60c a share.

The investment groups said the combined equity and bond issue would allow OZ Minerals to refinance its debt while keeping its portfolio of assets, which it argued was being sold to China at a price that was significantly below the Grant Samuel independent valuation of OZ's operations.

A source close to the groups said they had previously been told their proposal was there on value but not on certainty, a claim OZ has denied.

"The groups are gobsmacked that the board believes Minmetals is still superior on value," the source said. "It's up to shareholders now to question the board over this at its AGM."

The miner's banks, who almost tipped the company into administration, only agreed to extend its debt facilities of about $1.2bn to June 30 on condition the Minmetals deal proceeded.

OZ has warned shareholders that voting against the Minmetals transaction, which it unanimously recommends they accept, could push the miner into voluntary administration or receivership.

But Commonwealth Bank chief executive Ralph Norris, one of OZ's financiers, told online website Business Spectator at the weekend that he would not withdraw support from the miner if it did not recommend the Minmetals offer and pursued a better offer for shareholders.