Palmer plans takeover to build $18b resources titan
24th July 2008, 7:30 WST
Iron ore billionaire Clive Palmer is poised to launch a takeover bid for his Perth offshoot, Australasian Resources, as part of an $18 billion dream to build an Australian resources giant listed on Hong Kong’s bourse.
Australasian is expected to confirm today that it has received a takeover proposal from Mr Palmer, its biggest shareholder, as part of his bigger ambition to list another of his vehicles, Resource Development International (RDI), on the Stock Exchange of Hong Kong.
It is expected Australasian will form a core plank of RDI because of the advanced state of its $2.7 billion Balmoral South magnetite project in the Pilbara, which is on track to produce 12 million tonnes a year of iron ore concentrate and pellets for 25 years from 2012.
Australasian’s shares have been in a trading halt since Monday. The company has refused to comment on Mr Palmer’s plans.
Australasian’s shares last traded at $1.19, having been hard hit by the general malaise affecting the sharemarket as well as its limited free float. Mr Palmer owns 66.6 per cent of the $529 million-valued Australasian, whose shares traded as high as $2.45 in January.
Today’s expected announcement will coincide with a flying visit to the Cape Preston area in the Pilbara by Mr Palmer, Australasian executives and RDI’s float advisers Macquarie Group and UBS.
The visit is designed to show Macquarie and UBS the rapid development of two iron ore projects on Mr Palmer’s extensive Cape Preston landholding, which he claims contains up to 160 billion tonnes of magnetite and is sufficient to underpin several stand-alone operations.
One of the operations is Citic Pacific’s Sino Iron project, which has paid Mr Palmer more than $400 million in return for the right to mine two billion tonnes of ore. The other operation is Australasian’s, which, in conjunction with Sino Iron, is also developing a port at Cape Preston.
Mr Palmer’s ambition with RDI is to create a diversified resources house that can deliver key commodities into the Chinese market.
In addition to his extensive iron ore interests, Mr Palmer is also expected to vend into RDI his stakes in gas junior Meo Australia, which has significant discoveries off WA’s North-West and plans for liquefied natural gas and gas-to-liquids plants; a controlling shareholding in London-listed Gladstone Pacific Nickel, the proponent of a $3.65 billion plant in Queensland; and his $5 billion east coast steel plant project.
Macquarie and UBS are believed to be confident of raising the proposed $5 billion in RDI’s initial public offering as well as $2 billion in oversubscriptions.
It is understood the investment banks have already received substantial IPO pre-commitments, although pricing of RDI is yet to be sorted.
Once floated, RDI would emerge as a cashed-up resources giant possibly worth $18 billion and with a range of institutional and strategic shareholders, likely to include Chinese steel mills.
Mr Palmer would retain a controlling stake of between 40 per cent and 60 per cent.
Once listed in Hong Kong, RDI would then launch a scrip-based takeover of Australasian, whose next-biggest shareholder behind Mr Palmer is Chinese group Shougang. Australasian has about 6000 other shareholders.
It is likely that RDI would seek an Australian listing once the Australasian takeover is completed.
PETER KLINGER
ARH Price at posting:
0.0¢ Sentiment: None Disclosure: Held
