OZ Minerals (OZL.AX, Buy, TP A$0.825) – arbitrage opportunity􀀟...

OZ Minerals (OZL.AX, Buy, TP A$0.825) – arbitrage opportunity
􀀟 Takeaways from the result – The company has received approvals for a one-month
extension of its debt facilities, subject to documentation. In our view, this is a strong indication
of support from OZL's financiers and a further extension looks likely.
􀀟 Outlook – OZL shares have traded at a discount to the Minmetals offer of A$0.825 per share
since they relisted, implying the market did not place a high probability of the bid going ahead
or a resolution to OZL's debt problems. We continue to believe the best chance for the banks
getting all their money back in the shortest possible timeframe is to grant another extension.
We also believe FIRB is likely to approve the deal given it is in the best interests of the
company's employees, financiers and suppliers.
􀀟 Investment view – We think there is an arbitrage opportunity given the share price and bid
price differential. While the deal is far from done, on balance we believe it is likely to go
through. The significant discount to the bid that OZL is trading on offers a good short-term
trade, in our view.