OZ Minerals Will Stick with China Deal

It won't pursue an unsolicited US$1.2 billion refinancing proposal from Royal Bank of Canada and RFC Group.

Australian miner OZ Minerals said on June 8 it would stick with a plan to sell most of its assets to China's Minmetals and reject a last-minute alternative proposal. The debt-laden miner said it would not pursue an unsolicited US$1.2 billion refinancing proposal from Royal Bank of Canada (RBC) and RFC Group made on June 5 because the Minmetals proposal offered better value.

"We certainly had a very close look at their proposal, we have taken independent advice. We concluded it ... doesn't have any prospect of becoming a superior proposal," OZ Minerals business support general manager Bruce Loveday said. Loveday also said the RBC-RFC proposal "wasn't sufficiently certain."

The proposal by Minmetals has already been approved by the Australian government and is due to go to a shareholder vote on June 11.

Loveday said that should the Minmetals transaction be voted down, OZ Minerals would run "a very high risk of receivership."

"Should shareholders of OZ Minerals reject the Minmetals offer, the OZ Minerals board will still have the option of pursuing our recapitalization proposal," said RFC managing director Rob Adamson.

Canberra approved Minmetals' US$850 million offer after the Chinese firm adjusted it to exclude OZ's flagship Prominent Hill mine because it was located near a military rocket testing range in South Australia.

Had the deal failed, it would have been the second Chinese offer related to Australia's resources sector to have soured in less than a week, after Rio Tinto last dumped a planned tie-up with Chinalco. Rio rejected Chinalco's $19.5 billion offer for an improved stake in the mining giant, saying improved commodity prices meant a rights issue and a joint venture with former rival BHP Billiton were more appealing.

Copyright Agence France-Presse, 2009

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