sinosteel open to higher bid for midwest

Tuesday May 27, 2008, 9:37 am

Chinese steel group Sinosteel has opened the door to making a higher bid for Western Australian iron ore miner Midwest Corporation Ltd.

Responding to Monday's increased bid for Midwest by rival Murchison Metals Ltd, Sinosteel on Tuesday distanced itself from comments by one of its senior managers last week that it was not prepared to raise its bid.

Sinosteel said deputy general manager, William Ren, who was reported last week as saying Sinosteel would not increase its own bid, was "not an official spokesman for the transaction.

"... his comments were based on his understanding of public information and should not be taken as indicative of Sinosteel's intentions," the group said.

"Sinosteel reserves its rights and will consider all options in its response" to the Murchison bid.

Last week, Mr Ren was reported as saying that Sinosteel did not intend to raise its $1.37 billion bid for Midwest.

Sinosteel says it holds 19.89 per cent of Midwest, making it Midwest's largest shareholder.

Sinosteel "will review the (Murchison) announcement carefully before determining its response," the group said.

"Sinosteel is also of the view that its offer, which will be increased to $6.38 cash per Midwest share if it achieves a relevant interest of at least 50.1 per cent in Midwest, provides the certainty of cash in a challenging environment."

Midwest shares surged Monday on the higher $1.53 billion bid from Murchison.

Murchison has proposed a merger via a scheme of arrangement, offering one share and an option on issue for every 0.575 Midwest shares, valuing Midwest shares at about $7.17 each.

The Midwest board gave no definitive direction to shareholders and stated its support for both offers.

"The two (offers) are existing in parallel ... At some point ... shareholders will need to make a decision," Midwest chief executive Bryan Oliver said on Monday.

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