ex midwest director to sell stake to sinosteel

Ex-Midwest director to sell stake to Sinosteel-paper

SYDNEY, Sept 13 (Reuters) - A former senior official at Australian iron ore prospector Midwest Corp (MIS.AX: Quote, Profile, Research, Stock Buzz) has decided to sell his stake to Chinese state-owned trading firm Sinosteel, a local newspaper reported on Saturday.

The Australian newspaper said former director David Law's decision to sell his 12 percent stake in Midwest, would give Sinosteel more than 82 percent in the iron ore firm and would eventually pave the way for it to delist the Australian company.

Late in July, Sinosteel acquired Midwest for $1.3 billion, China's biggest ever corporate takeover in Australia, defeating a plan by Murchison Metals Ltd (MMX.AX: Quote, Profile, Research, Stock Buzz) to merge with Midwest. Sinosteel, China's largest ferrous metals trader, saw off Murchison with a cash offer of A$6.38 per Midwest share.

The acquisition came amid moves by China, the world's largest steel producing country, to seek stakes in iron ore start-ups in a bid to break its dependence on ore from heavyweights Rio Tinto Ltd/Plc (RIO.AX: Quote, Profile, Research, Stock Buzz) (RIO.L: Quote, Profile, Research, Stock Buzz) and BHP Billiton Ltd/Plc (BHP.AX: Quote, Profile, Research, Stock Buzz) (BLT.L: Quote, Profile, Research, Stock Buzz).

Earlier this week, Murchison, which is a fellow Australian iron ore prospector, sold its 9.2 percent stake in Midwest Corp to Sinosteel for about A$135 million ($111 million).

The Australian quoted Sinosteel as saying that Armadale Offshore, a company associated with Law had decided to accept its A$6.38 a share cash offer which is due to close on Monday evening.

"Sinosteel said it would lodge a notice with the ASX on Monday, giving its exact stake after the acceptance from Mr. Law and the earlier acceptance of a 9 percent stake from Murchison," the Australian said. ASX is the Australian Stock Exchange.

The acceptance by Law would leave only another major stakeholder in Midwest, Harbinger Capital, to come aboard for Sinosteel to reach the 90 percent mark needed to force out minority shareholders.

United States-based Harbinger has previously indicated it would reject Sinosteel's offer for its 15.2 per cent stake in Midwest. Harbinger paid more than Sinosteel's A$6.38 cash per share offer for its stake in Midwest.

A spokesman for Sinosteel told the Australian that the company had not yet heard from Harbinger.

Midwest's shares closed Friday unchanged at A$6.37 in a broad Australian stock market which rose 1.9 percent. ($1=A$1.21) (Reporting by Anirban Nag; Editing by Ben Tan)