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March 4, 2008 |
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ZINIFEX: Enters Into AU$12-Bil. Merger Agreement with Oxiana Oxiana Ltd. and Zinifex Limited agreed to merge to establish AU$12 billion-mining company, making it the world's second- largest zinc producer and Australia's third-largest diversified miner, The Financial Times reports. After 12 months of intense negotiations, the parties have reached a deal where gold and copper miner Oxiana will buy zinc and lead producer Zinifex for AU$6.2 billion (US$5.8 billion), the FT relates. Under the deal, which requires approval from 75% of Zinifex shareholders, Oxiana will offer 3.2 of its shares for each Zinifex share and the new company will be equally owned by Oxiana and Zinifex shareholders. "The merged entity would be very well positioned to benefit from the strength of demand for commodities we see stretching out for many years," Zinifex Chief Executive Andrew Michelmore told the FT. The two companies have largely complementary asset portfolios and development pipelines. If the transaction is approved, Mr. Michelmore will head up the merged company, the same report says. Owen Hegarty, Oxiana chief executive, will stay on as a director and run the integration. The FT adds that Zinifex directors have unanimously recommended shareholders vote in favor of the proposed merger, in the absence of a superior offer, and said they plan to vote all of the shares they own in favor of the scheme. However, some fund mangers are concerned the deal is vision- rather than value-driven, noting that while Oxiana market capitalization is higher, Zinifex has a much stronger balance sheet and at AU$1.3 billion its net profit is almost double Oxiana's, the FT relates. But Mr. Michelmore assured Financial Times that the size of the merged group and its growth prospects would ensure long-tem value for shareholders. On the other hand, Mr. Hegarty said the merged group could take on larger projects with greater geographical diversity. The new company will have combined earnings before interest, tax, depreciation and amortisation of AU$1.7 billion and a net cash balance of AU$1.9 billion, providing a strong platform for both organic growth and acquisitions, the FT says. Zinifex's recommended AU$852 million takeover offer for Australian nickel group Allegiance Mining will not be affected by the Oxiana proposal, the company told the FT. About Oxiana Ltd. Oxiana Ltd. is a mining and exploration company. During the year ended Dec. 31, 2007, the principal activities of Oxiana consisted of production of gold and copper cathode at Sepon in Laos; production of zinc, copper and precious metal concentrates at Golden Grove in Western Australia; feasibility evaluation of the Martabe gold project in Indonesia; exploration for further resources at Sepon, Golden Grove and Prominent Hill; exploration activities in other parts of Laos, Indonesia, China, Thailand, Cambodia, Vietnam and Australia, and evaluation of other exploration and business development opportunities. It has six business segments: Sepon Gold operations, Sepon Copper operations, Oxiana Golden Grove operations, Oxiana Prominent Hill, Martabe and other, which includes revenues and expenses associated with general corporate office activities. About Zinifex 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 on Dec. 18, 2007, that Fitch Ratings affirmed Zinifex Limited's 'BB+' long-term foreign currency Issuer Default Rating, following the announcement of an all cash offer for Allegiance Mining NL (Allegiance). Fitch said the outlook is stable |
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