Trading halts for Prime Media and OZ Minerals yesterday for widely differing reasons.
Oz was expecting an update about the status of the Foreign Investment Review Board investigation into a $2.6 billion bid by China Minmetals, Prime is after new capital tor rebuild a depleted balance sheet.
OZ got what it didn’t want: FIRB has extended its consideration of the deal by 90 days, which will add to the huge financial pressures on the embattled Melbourne-based miner.
The Chinese government-owned Minmetals had applied to FIRB for the go-ahead to buy the debt-stricken OZ.
If the deal collapses or isn’t approved, OZ will almost certainly collapse.
The OZ deal has been caught up in the furore around Chinalco’s $US19.5 billion investment in Rio Tinto. FIRB has extended its review of that by 90 days
The review board had 30 days to make a recommendation or order an extension when assessing applications.
The problem for OZ Minerals is that FIRB’s decision will have a critical impact on its ability to stay afloat because of its crippling debts. OZ said last night it is continuing talks with its banks to extend funding.
The Minmetals bid is for all of OZ, compared to the smaller stake sought in Rio.
OZ Mineral’s bankers have given the company until today week, March 31 to refinance $1.3 billion in debt after several months of negotiations. If the deal with Minmetals is thwarted they may be forced to place OZ into administration.
OZ Minerals – the product of a merger between Oxiana and Zinifex – has attempted to sell assets into a poor market in recent months, but has failed to announce any deals.
OZ trying to sell its Martabe gold and silver project in Indonesia and the Golden Grove polymetallic mine in Western Australia, but with little progress to date.
Shares in the company are in a trading halt and last traded at 59 cents.
It has suffered huge write-offs and trading losses as lead and zinc prices have fallen sharply.
The Senate’s economics committee launched an inquiry last week into Chinese investment in the minerals industry after Nationals Senator, Barnaby Joyce, started campaigning against the OZ Minerals and Rio deals.
Last Friday OZ shares rose 12% after analysts at Citi predicted that FIRB would approve the takeover because OZ’s assets were less strategically significant to Australia.
Meanwhile for the regional TV group, Prime, cash is also needed.
Prime Media yesterday went into a trading halt as it considers capital management initiatives.
"A trading halt is necessary as Prime expects to make an announcement in relation to capital management initiatives," the company said in a statement to the ASX.
Prime asked for that the halt continue until the opening of trade on Friday, unless it requests the halt be lifted before that time.
The Canberra-based company is a free-to-air television broadcaster that has been recently diversifying into radio broadcasting and digital new media.
Prime made a first half loss of $28.97 million in the six months to the end of December, 2008, compared to a profit of $18.46 million in the prior corresponding half.
The company said the loss included $41.9 million of significant and non-recurring items, which included write-downs on its radio licences and the failed investment Destra Corporation which collapsed.
Kerry Stokes Seven Network, or his private company, ACE, are the logical sources of the money. Prime is Seven’s regional distributor.
But Seven and Stokes can’t control Prime as that would put them in breach of media market share rules.
