Mining Journal > Finance > Oz Minerals China deal gets approval

OZ Minerals Ltd’s shareholders approved a plan to sell US$1.39 billion of assets to China Minmetals Group to cut debt after the Chinese company sweetened its offer yesterday to fend off rival proposals.
     
About 92% of shareholders voted in favour of the plan at the Melbourne-based company’s annual general meeting, OZ Minerals said in a statement to the Australian stock exchange. The approval required a minimum of 50% of acceptances.
    
Minmetals, China’s biggest metals trader, gains control of the world’s second-biggest zinc mine and supplies of copper, gold and nickel. The acquisition may ease Chinese concern about investment in Australia after Rio Tinto  scrapped a US$19.5 billion investment by Aluminum Corp. of China last week in favour of an iron venture with BHP Billiton.
    
The sale “secures the future of our current operations for the benefit of all stakeholders,” Chairman Barry Cusack said at the meeting.
    
OZ Minerals shares were suspended on Thursday and will resume on Friday. The stock fell 2.2% to A$0.89 on Wednesday on the Australian stock exchange, giving it a market value of A$2.8 billion (US$2.28 billion). Minmetals is advised by UBS AG and OZ Minerals is advised by Goldman Sachs JBWere Pty.

State-controlled Minmetals on Wednesday raised its offer by US$180 million, or 15%, after OZ Minerals this week said it had received two alternative proposals. The Minmetals Australian unit will be based in Melbourne and will hire about 70% of OZ Minerals workers, Mark Liu, Minmetals project director for the transaction, said.
    
Minmetals president Zhou Zhongshu will visit Australia next week, the company said in an e-mailed statement. The company expects to complete the purchase within a week, Mr Liu said.
    
“The strategy for our company is growth outside of China with a vehicle like OZ Minerals,” Mr Liu said. “That’s how we see our future of the company. We very much rely on the expertise and experience those people bring across from OZ Minerals.”
    
OZ Minerals will use the funds from the sale to pay A$1.1 billion in debt and help finance exploration and expansion at its Prominent Hill mine in South Australia and other projects in the country and overseas. The A$1.2 billion Prominent Hill operation will now be the company’s primary source of revenue.
    
Two unsolicited recapitalisation proposals, including a US$1.2 billion plan by RFC Group and Royal Bank of Canada, were inferior to the Minmetals bid, OZ Minerals said this week.

The second proposal was withdrawn on Wednesday, OZ Minerals’Mr Cusack said. Macquarie Group Ltd. withdrew a US$1.4 billion proposal to recapitalise OZ Minerals through the issue of 2.54 billion OZ shares, the Australian newspaper said.
    
Minmetals was blocked from a full takeover of OZ Minerals by Australian Treasurer Wayne Swan in March because of the Prominent Hill mine’s proximity to the Woomera weapon testing range.