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December 19, 2007 |
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ZINIFEX LTD: Allegiance Says Cash Offer Is "Opportunistic" The Board of Allegiance Mining NL is advising shareholders to take no action regarding Zinifex Limited's all-cash takeover offer. Zinifex Limited announced on Monday an off-market all cash takeover offer for all of the issued ordinary shares of Allegiance Mining NL by its subsidiary Zinifex Australia Limited. Under Zinifex's two-tiered offer structure, Allegiance shareholders will be offered $0.90 cash per share -- totaling AU$775 million. This will be increased to $1.00 cash per share for all Allegiance shareholders who accept Zinifex’s Offer, if Zinifex obtains a relevant interest of more than 30% of Allegiance shares, or if the Allegiance Board of Directors recommends the Offer. Allegiance Chairman Tony Howland-Rose said Zinifex’s takeover offer is unsolicited. "The Allegiance Directors believe the offer is opportunistic and designed to take advantage of the company following the recent successful drawdown of the project finance facilities and with production scheduled to commence at the company’s Avebury Nickel project which is expected in the first quarter 2008." "The Board is unanimous in its view that Allegiance shareholders should take no action or make any decision in relation to their shareholding until the Board has had an opportunity to consider the Bidder's Statement and has issued its formal recommendation regarding the offer." Allegiance has appointed Merrill Lynch International (Australia) Limited and ANZ Corporate Finance as financial advisers and Minter Ellison and Schetzer Brott & Appel as its legal advisers to assist the Directors to evaluate and respond to the unsolicited takeover offer from Zinifex. According to Zinifex, its Offer clearly represents an attractive premium for Allegiance shareholders: Cash Offer Price $0.90 $1.00 Premium to Closing Price 27% 41% Premium to 1 Month VWAP 29% 44% Note: Closing price of $0.71 as at 14 December 2007, 1 Month VWAP of $0.695 VWAP = volume weighted average price Zinifex newly-elected Chief Executive Officer Andrew Michelmore said that Allegiance's Avebury project is "an excellent entry point for Zinifex with nickel production due to commence in early 2008," contributing to Zinifex's strategy to "vigorously grow" in the company's chosen base metals of copper, nickel and zinc. Mr. Michelmore added, "We like investing in high margin, long life, expandable mines, and Avebury delivers all of these attributes. Avebury promises to be an exciting new nickel region that, with appropriate investment, we expect will support rapid production expansion and mine life extension." Allegiance is the owner of the 8,500 tonnes per annum Avebury nickel project on the Tasmanian west coast, which is due to be commissioned in the first quarter of 2008. According to Bloomberg News, buying Allegiance will give Zinifex the Avebury nickel mine, which will supply China's Jinchuan Group Co. with AU$3 billion of nickel, used to make stainless steel. In a media briefing, Bloomberg notes, Mr. Michelmore revealed that Zinifex has a team studying a portfolio of potential acquistion targets and will continue to study large takeover, including an expansion into copper. Bloomberg quotes Mr. Michelmore as saying, "We continue to look at those and like Allegiance we will do our numbers and we will work out when is appropriate and what are the appropriate ones." About Zinifex Ltd. Zinifex Limited, one of the world's largest integrated zinc and lead companies -- http://www.zinifex.com/ -- is headquartered in Melbourne, Australia. The company owns and operates two mines and four smelters. The mines and two of the smelters are located in Australia and supply the growing industrial markets of the Asian-Pacific region, including China. The company also has a zinc smelter in the Netherlands and the United States. The company sells a range of zinc metal, lead metal, and associated alloys in 20 countries. More than 80% of the company's products are distributed outside Australia, particularly in Asia, which is experiencing significant growth in construction activity and vehicle production. Zinc is used for steel galvanizing and die-casting and lead for lead acid batteries used mainly in cars and other vehicles. * * * The Troubled Company Reporter-Asia Pacific reported yesterday that Fitch Ratings affirmed Zinifex Limited's 'BB+' Long-term foreign currency Issuer Default Rating (IDR), following the announcement of an all cash offer for Allegiance Mining NL (Allegiance). The Outlook is Stable. |
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