Shares in debt-ridden Melbourne miner, OZ Minerals finished down yesterday, but not out as investors reacted negatively to the delay from the Foreign Investment Review Board to the $2.6 billion takeover offer from China’s Minmetals.
OZ shares plunged 15% at the opening yesterday to a low of 50c, before they struggled higher to end at 53.5, a loss of 9.3% on the day.
The FIRB inquiry was extended to June 22, leaving OZ Minerals, the world’s second-biggest zinc miner, at the mercy of its lenders to extend a March 31 deadline on $1.3 billion in debt or face collapse.
The shares are now about 39% below the 82.5c a share offered by Minmetals, reflecting uncertainty over the deal’s fate.
Investment analysts, lobbyists and academics, expect the deal to be approved eventually, possibly with conditions as it involves a full takeover by a state-owned Chinese company.
Deutsche Bank analysts told clients yesterday that FIRB’s extension could be because of concerns over the ownership of assets by a Chinese state-owned firm.
The analysts also suggested that FIRB needed time to assess the deal and apply appropriate conditions, likely to be job retention related.
“The delay was unexpected, however we assume the deal will be approved by June 22 with major job losses the likely outcome if FIRB rejects Minmetals bid,” Deutsche said in a client note.
National Party politician, Barnaby Joyce has lumped Minmetals’ deal in with the more controversial deal of Chinalco’s $US19.5 billion tie-up with global miner Rio Tinto.
That’s also being reviewed by FIRB and has been extended.
OZ’s minerals are not as strategic as Rio Tinto’s iron ore and other mining assets (being world class mines), but the approval and need for cash is far more important. .
Britain’s BG Group is well on the way to grabbing 100% ownership of Pure Energy Resources Ltd. after thwarted rival bidder, Arrow Energy accepted the UK company’s offer.
Arrow accepted BG’s offer for its 20.3% in Pure, meaning the $1.03 billion offer will succeed at the higher price of $8.25 a share.
That acceptance took BG’s stake to more than 90% and triggered the higher price provision of the offer.
Arrow said it will make a profit of about $200 million on its investment in Pure.
Pure Energy rose 13 cents, yesterday to $8.25 on the ASX yesterday. It’s all over a done.
Arrow’s biggest shareholder, Shell, had accepted in respect of its 11% holding in Pure.
BG said yesterday that it would now issue a notice for the compulsory acquisition of the remaining shares in Pure Energy before the close of the offer on April 6.
And Queensland based coal group, New Hope Corp, reported a record net profit yesterday for the first half of the 2009 year because of its sale of a coal interest back to BHP for far more than it originally paid.
The New Saraji project was sold to BHP Billiton last year for $2.45 billion: that was the highest price paid for a coal interest (not company) in Australia.
BHP has years before sold the ground to New Hope when coal was less popular.
Sales doubled to $308 million because of higher prices, they will fall sharply this year because of lower prices for coking and thermal coal on world and local markets.
New Hope sold New Saraji which will be developed by BHP and partner Mitsubishi Corp., who form the BHP Billiton Mitsubishi Alliance, (BMA) the world’s largest exporter of coking coal.
New Hope Chairman Robert Milner (who is also chairman of Washington H Soul Pattinson, which controls New Hope) said yesterday that annual sales and profit guidance was being maintained even though the outlook for both was more volatile because of the global recession.
“The volatility of world economies continues to present some exposure to future export sales contracts – both in volume and price,” he said in yesterday’s profit statement.
“Interest earnings from the sale of the New Saraji project will continue to boost short-term profit.”
The shares rose 1.5% to $4.05, and then fell in the afternoon to close off 16 cents or 4% at $3.83.
Net profit from operations rose more than threefold to $132.5 million in the first half, because of the surge in world coal prices over the past 12 months. New Hope will pay a first-half dividend of 4.75 cents a share, up from 2.25 cents a year earlier.
