Yes, I agree. MGX certainly has very good growth potential. The following is from stocknessmonster.com today
MGX - Mount Gibson Iron
- Thread starter The Barbarian Investor
- Start date
-
- Tags
- mgx mount gibson iron
Yes, I agree. MGX certainly has very good growth potential. The following is from stocknessmonster.com today
- Joined
- 20 December 2007
- Posts
- 745
- Reactions
- 0
was high as 3.35 today now currently trading in the red..
did people profit take or news related price movement?
did people profit take or news related price movement?
- Joined
- 20 December 2007
- Posts
- 745
- Reactions
- 0
Mount Gibson Iron Limited – Panel Receives Application
news out just now... price keep steady around $3 very interesting
news out just now... price keep steady around $3 very interesting
- Joined
- 20 December 2007
- Posts
- 745
- Reactions
- 0
Chinese stake needs scrutinyFont Size: Decrease Increase Print Page: Print Bryan Frith | February 19, 2008
WAYNE Swan will no doubt be closely observing Mt Gibson Iron Ore's complaint to the Takeovers Panel about the recent purchase of 19.73 per cent of the emerging iron ore producer by the state-owned Shougang Corp of China.
The panel application comes at the same time that the Rudd Government has announced that investments in Australian companies by foreign government-controlled entities, including sovereign wealth funds, will be subject to greater scrutiny.
The Government is concerned that such entities "may not operate solely in accordance with commercial considerations, and may instead pursue broader political or strategic objectives that could be contrary to Australia's national interest".
Shougang bought the 19.73 per cent stake just over two weeks ago from the Russian group Gazmetall, which is controlled by the Russian billionaires Alisher Usmanov and Vasiliy Ansimov. The purchase will require foreign investment approval.
Mt Gibson reacted with suspicion, stating that it was making inquiries in relation to the transaction. Mt Gibson was no doubt concerned that Shougang was already a significant shareholder in Mt Gibson's other major shareholder, Hong Kong's APAC Resources (formerly Shanghai Merchants), which owns 20.22 per cent of Mt Gibson.
Moreover, until a few months ago Shougang would have been unable to acquire Gazmetall's shareholding without first extending a takeover bid to all Mt Gibson shareholders. That's because it owned more than 20 per cent of APAC, giving it a deemed relevant interest in that company's 20.22 per cent stake, and the Gazmetall purchase would have resulted in a 40 per cent relevant interest.
However, in July last year, APAC made a share placement that diluted Shougang's shareholding to around 15 per cent.
Interestingly -- perhaps significantly -- Shougang was the placement agent, which meant that it was involved in determining into whose hands the shares went.
Logic suggests the panel applications mean that Mt Gibson believes Shougang and APAC are associates and acting in cahoots to exercise control over the company. It may also consider that the APAC placement was made to deliberately reduce Shougang, below the point where it would have a relevant interest in the stake, thereby clearing the way for it to acquire Gazmetall's stake.
If so, it's tempting to wonder whether the Chinese have been seeking to stamp their influence on Mt Gibson over the past 18 months, and whether the proposed transaction is simply the latest move.
In June 2006, Mt Gibson received a requisition from the Hong Kong-based Sun Hung Kai Investment Services, seeking to appoint Wong Peng Chong to the board. SHK held 11 per cent of the capital on behalf of another Hong Kong group, the investment company COL Capital.
It so happens that COL Capital is a major shareholder in APAC, with about 11 per cent of the capital.
COL said it wanted a board representative as a means of facilitating greater dialogue between the company's largest shareholder and the board, and that many shareholders were comforted by the expectation that COL had a "direct insight" into the management of the company. Mt Gibson didn't think those were valid reasons to appoint Wong.
Shortly after, Mt Gibson launched a hostile bid for Aztec Resources and, with its attention diverted, agreed to the appointment of Alan Jones, who was nominated by COL. The shareholder meeting was cancelled.
In October that year, Mt Gibson was surprised when two small shareholders separately nominated candidates for election to the board at the annual meeting on December 1.
Rim Capital, which had 0.18 per cent of the capital, and which had associations with Col Capital, nominated Robert Willcocks, while Argyle Street Management, with 1.31 per cent of the capital, nominated Kin Chan.
Mt Gibson opposed their election, arguing, among other things, that the present board of seven directors was optimal for a company of its size. Three existing directors -- chairman William Willis, executive director Ian Macliver and Alan Jones -- also stood for re-election.
On October 31, Shanghai Merchants acquired Col Capital's 10.6 per cent stake in Mt Gibson and also bought Aztec shares, intending to accept the scrip bid and lift its Mt Gibson stake to about 14 per cent.
Soon after, John Byrne's Cambrian Mining sold a 19.9 per cent stake in Mt Gibson to Gazmetall, which would dilute to 14 per cent after the acquisition of Aztec.
Before the AGM was held, Mt Gibson became concerned about the motives of the Chinese shareholders and persuaded Gazmetall to support the board in rejecting the two board candidates.
As it turned out, it was extremely close. Willcocks and Chan were defeated by only 10 million votes -- 178 million for to 189 million against. Moreover, Willis and Macliver only got home by 23 million votes -- 195 million for, 174 million against. Jones romped in with 369 million votes for and only 500,000 against.
As Gazmetall voted for Willis, Macliver and Jones and against Willcocks and Chan, it seems apparent that Shanghai Merchants/APAC and related Chinese interests voted for the duo put forward by Rim Capital and Argyle Street Management, and against Willis and Macliver, but for Jones.
Had the Chinese succeeded, they would have had three representatives on a board of seven, which would have given them significant influence; moreover, it arguably would have demonstrated an ability to take board control if they wished.
Then there's Australasian Resources. Last March the company announced it had agreed to issue shares and options to raise up to $98 million to entities associated with Shougang Corp to help fund the company's Balmoral South iron ore project in the Pilbara. One of those entities was APAC.
And last month, Metals X announced that it had raised $59.4 million through a share placement to APAC, which it described as backed by several Chinese steel mills and Shougang.
It also won't have been lost on Mt Gibson that Shougang and APAC share the same chairman, Cao Zhong.
Moreover, the share sale agreement between Gazmetall and Shougang provides that either party may terminate if the Federal Court or a Supreme Court were to find the agreement unlawful or unenforceable for any reason or the Takeovers Panel finally determined the transaction would involve unacceptable circumstances.
Such a provision is commonplace in a takeover bid, but not for a share-sale agreement. Arguably it demonstrates some concern that the proposed sale may be challenged, on the grounds that Shougang and APAC are associates. If the panel were to make such a finding it would remain to be seen what orders it would make.
Presumably, Mt Gibson's starting point would be the prevention of the transaction, but it may also be unhappy about leaving Gazmetall and APAC as major shareholders and seek to have the shares vested with ASIC and sold.
Whether the panel would go that far is another matter. But in the present heady market for iron ore, there may be plenty of buyers.
Shougang agreed to pay Gazmetall $2.60 a Mt Gibson share, but its share price jumped 15c yesterday to $3.22 following news that Japan's Nippon Steel and South Korea's Posco had agreed to a 65 per cent price hike for iron ore supplied by Brazil's Vale.
WAYNE Swan will no doubt be closely observing Mt Gibson Iron Ore's complaint to the Takeovers Panel about the recent purchase of 19.73 per cent of the emerging iron ore producer by the state-owned Shougang Corp of China.
The panel application comes at the same time that the Rudd Government has announced that investments in Australian companies by foreign government-controlled entities, including sovereign wealth funds, will be subject to greater scrutiny.
The Government is concerned that such entities "may not operate solely in accordance with commercial considerations, and may instead pursue broader political or strategic objectives that could be contrary to Australia's national interest".
Shougang bought the 19.73 per cent stake just over two weeks ago from the Russian group Gazmetall, which is controlled by the Russian billionaires Alisher Usmanov and Vasiliy Ansimov. The purchase will require foreign investment approval.
Mt Gibson reacted with suspicion, stating that it was making inquiries in relation to the transaction. Mt Gibson was no doubt concerned that Shougang was already a significant shareholder in Mt Gibson's other major shareholder, Hong Kong's APAC Resources (formerly Shanghai Merchants), which owns 20.22 per cent of Mt Gibson.
Moreover, until a few months ago Shougang would have been unable to acquire Gazmetall's shareholding without first extending a takeover bid to all Mt Gibson shareholders. That's because it owned more than 20 per cent of APAC, giving it a deemed relevant interest in that company's 20.22 per cent stake, and the Gazmetall purchase would have resulted in a 40 per cent relevant interest.
However, in July last year, APAC made a share placement that diluted Shougang's shareholding to around 15 per cent.
Interestingly -- perhaps significantly -- Shougang was the placement agent, which meant that it was involved in determining into whose hands the shares went.
Logic suggests the panel applications mean that Mt Gibson believes Shougang and APAC are associates and acting in cahoots to exercise control over the company. It may also consider that the APAC placement was made to deliberately reduce Shougang, below the point where it would have a relevant interest in the stake, thereby clearing the way for it to acquire Gazmetall's stake.
If so, it's tempting to wonder whether the Chinese have been seeking to stamp their influence on Mt Gibson over the past 18 months, and whether the proposed transaction is simply the latest move.
In June 2006, Mt Gibson received a requisition from the Hong Kong-based Sun Hung Kai Investment Services, seeking to appoint Wong Peng Chong to the board. SHK held 11 per cent of the capital on behalf of another Hong Kong group, the investment company COL Capital.
It so happens that COL Capital is a major shareholder in APAC, with about 11 per cent of the capital.
COL said it wanted a board representative as a means of facilitating greater dialogue between the company's largest shareholder and the board, and that many shareholders were comforted by the expectation that COL had a "direct insight" into the management of the company. Mt Gibson didn't think those were valid reasons to appoint Wong.
Shortly after, Mt Gibson launched a hostile bid for Aztec Resources and, with its attention diverted, agreed to the appointment of Alan Jones, who was nominated by COL. The shareholder meeting was cancelled.
In October that year, Mt Gibson was surprised when two small shareholders separately nominated candidates for election to the board at the annual meeting on December 1.
Rim Capital, which had 0.18 per cent of the capital, and which had associations with Col Capital, nominated Robert Willcocks, while Argyle Street Management, with 1.31 per cent of the capital, nominated Kin Chan.
Mt Gibson opposed their election, arguing, among other things, that the present board of seven directors was optimal for a company of its size. Three existing directors -- chairman William Willis, executive director Ian Macliver and Alan Jones -- also stood for re-election.
On October 31, Shanghai Merchants acquired Col Capital's 10.6 per cent stake in Mt Gibson and also bought Aztec shares, intending to accept the scrip bid and lift its Mt Gibson stake to about 14 per cent.
Soon after, John Byrne's Cambrian Mining sold a 19.9 per cent stake in Mt Gibson to Gazmetall, which would dilute to 14 per cent after the acquisition of Aztec.
Before the AGM was held, Mt Gibson became concerned about the motives of the Chinese shareholders and persuaded Gazmetall to support the board in rejecting the two board candidates.
As it turned out, it was extremely close. Willcocks and Chan were defeated by only 10 million votes -- 178 million for to 189 million against. Moreover, Willis and Macliver only got home by 23 million votes -- 195 million for, 174 million against. Jones romped in with 369 million votes for and only 500,000 against.
As Gazmetall voted for Willis, Macliver and Jones and against Willcocks and Chan, it seems apparent that Shanghai Merchants/APAC and related Chinese interests voted for the duo put forward by Rim Capital and Argyle Street Management, and against Willis and Macliver, but for Jones.
Had the Chinese succeeded, they would have had three representatives on a board of seven, which would have given them significant influence; moreover, it arguably would have demonstrated an ability to take board control if they wished.
Then there's Australasian Resources. Last March the company announced it had agreed to issue shares and options to raise up to $98 million to entities associated with Shougang Corp to help fund the company's Balmoral South iron ore project in the Pilbara. One of those entities was APAC.
And last month, Metals X announced that it had raised $59.4 million through a share placement to APAC, which it described as backed by several Chinese steel mills and Shougang.
It also won't have been lost on Mt Gibson that Shougang and APAC share the same chairman, Cao Zhong.
Moreover, the share sale agreement between Gazmetall and Shougang provides that either party may terminate if the Federal Court or a Supreme Court were to find the agreement unlawful or unenforceable for any reason or the Takeovers Panel finally determined the transaction would involve unacceptable circumstances.
Such a provision is commonplace in a takeover bid, but not for a share-sale agreement. Arguably it demonstrates some concern that the proposed sale may be challenged, on the grounds that Shougang and APAC are associates. If the panel were to make such a finding it would remain to be seen what orders it would make.
Presumably, Mt Gibson's starting point would be the prevention of the transaction, but it may also be unhappy about leaving Gazmetall and APAC as major shareholders and seek to have the shares vested with ASIC and sold.
Whether the panel would go that far is another matter. But in the present heady market for iron ore, there may be plenty of buyers.
Shougang agreed to pay Gazmetall $2.60 a Mt Gibson share, but its share price jumped 15c yesterday to $3.22 following news that Japan's Nippon Steel and South Korea's Posco had agreed to a 65 per cent price hike for iron ore supplied by Brazil's Vale.
- Joined
- 27 January 2008
- Posts
- 40
- Reactions
- 0
Excellent info Agro but what does this mean for the MGX share price?
I personally would opt out if MGX were taken over with a major Chinese influence, I can only see good things for MGX if it stays controlled as is or was taken over by an existing Aussie identity such as RIO or BHP.
Anyones thoughts?
I personally would opt out if MGX were taken over with a major Chinese influence, I can only see good things for MGX if it stays controlled as is or was taken over by an existing Aussie identity such as RIO or BHP.
Anyones thoughts?
- Joined
- 25 August 2005
- Posts
- 124
- Reactions
- 0
Aside from who's buying wot and who owns wot, the price is trending nicely apart from that push down/shakeout 3 days ago. Iron orers should only strengthen as the chinese ore price announcements gather steam.
- Joined
- 20 December 2007
- Posts
- 745
- Reactions
- 0
take over announcement released just now
proceedings are to commence with chinese.. asic suggest this needs checking out and put a hold on the Shougang share transaction.
proceedings are to commence with chinese.. asic suggest this needs checking out and put a hold on the Shougang share transaction.
- Joined
- 25 August 2005
- Posts
- 124
- Reactions
- 0
not really a "takeover" announcement as such, or a trading halt would o been called. $4.00 per share would b a good price
$4.00 per share would b a good price - Joined
- 30 March 2006
- Posts
- 285
- Reactions
- 0
Thats only a premium of about 15%. They'd have to pay a lot more than that to get MGX out of my pockets.
- Joined
- 30 March 2006
- Posts
- 285
- Reactions
- 0
Please explain. They need 90%+ to force me to sell.
And if the Takeovers Panel does find that they own over 20% of the shares already then that will mean that they have breached the rules. Gaining more than 20% ownership requires either shareholder approval or all shareholders being made the same offer for their shares. Nobody can just swoop in and grab over 20% of a companies shares without having it run through the shareholders first.
And if the Takeovers Panel does find that they own over 20% of the shares already then that will mean that they have breached the rules. Gaining more than 20% ownership requires either shareholder approval or all shareholders being made the same offer for their shares. Nobody can just swoop in and grab over 20% of a companies shares without having it run through the shareholders first.
This is heating up,
Looks like the break might be on again at this rate, opened at 2.50 and so far has added another 26c, or 7.5%.
This is what my understanding of the proposed transaction is:
Laurie, I assume you mean that if APAC and Shougang are found to be related parties, then this is how you arrive at your 40% ownership figure. I guess this is the aim of the Take Over Panel proceedings, to prove this or otherwise, and MGX will be arguing very strongly that there is a material connection here.
Shinobi, I imagine that the 19.73% purchase of MGX from Gazmetall was carefully managed to avoid seeking shareholder approval in the first place, but as you mentioned a breach would appear likely if it is proven that Shougang own more than 20% of MGX through the APAC-Shougang connection.
jman
Looks like the break might be on again at this rate, opened at 2.50 and so far has added another 26c, or 7.5%.
This is what my understanding of the proposed transaction is:
Laurie, I assume you mean that if APAC and Shougang are found to be related parties, then this is how you arrive at your 40% ownership figure. I guess this is the aim of the Take Over Panel proceedings, to prove this or otherwise, and MGX will be arguing very strongly that there is a material connection here.
Shinobi, I imagine that the 19.73% purchase of MGX from Gazmetall was carefully managed to avoid seeking shareholder approval in the first place, but as you mentioned a breach would appear likely if it is proven that Shougang own more than 20% of MGX through the APAC-Shougang connection.
jman
This is heating up,
Looks like the break might be on again at this rate, opened at 2.50 and so far has added another 26c, or 7.5%.
This is what my understanding of the proposed transaction is:
Laurie, I assume you mean that if APAC and Shougang are found to be related parties, then this is how you arrive at your 40% ownership figure. I guess this is the aim of the Take Over Panel proceedings, to prove this or otherwise, and MGX will be arguing very strongly that there is a material connection here.
Shinobi, I imagine that the 19.73% purchase of MGX from Gazmetall was carefully managed to avoid seeking shareholder approval in the first place, but as you mentioned a breach would appear likely if it is proven that Shougang own more than 20% of MGX through the APAC-Shougang connection.
jman
Yes that's what I mean jman2007
shinobi346 you can increase your holdings over 20% by using the creep provision over a six month time frame legally
cheers laurie
Laurie,
A quick rundown on creep provisions would be much appreciated. I assume it means a gradual accumulation of smaller parcels of shares within that 6 month time window?...obviously putting 2 and 2 together this could mean Shougang going over the 20% threshold.
Cheers
jman
http://www.finsia.com/cms/data/live/files/21679.pdf
This site has some good information on takeovers
cheers laurie
This site has some good information on takeovers
cheers laurie
Yes, creep provision can be used but under the Section 611 (Item 9) of the Corporations Act to "creep" by no more than 3% each six months.
So under the application to the Takeover panel MGX are asking for a ruling on the shougang share purchase which will be deemed illegal if they are connected to APAC forcing the sale to shougang to be cancelled.
No one can legally own from 20.3% which APAC owned and use a subsidary company to increase their holdings by 18.9% in one hit.
The main thing that MGX are trying to ensure is that no one can come in and say we own zyx% and want x amount of positions on the board and a say in io sales etc.
So the statement "You may not have any say in that if they already hold 40% if they reach 50% acceptance level then its automatically over red rover" is very misleading as they cannot legally hold this amount in the way it has been done and declare any association at all, under creep provisions it would take them 3 plus years to reach the 40%.
So if they have an association under the application by MGX they will have two choices, not proceed with the sale or launch a takeover bid and they will require 90% to reach compulsory acquisition. Remember that if MGX get the orders they are asking for the sale to Shougang cannot proceed so APAC will only hold their 20.3%, which will be the shareholding to launch their takeover from, not 40%.
If they get 50% they may have control of the company but the holder can still hold his shares, which has been beneficial to shareholders in the past.
So to put it simply nothing is over UNTIL it is over and many things will play out before it even gets to this stage.
Who knows what they are thinking, and they have been shown to be willing to pay a healthy premium to secure a company they want. Anything under $4.50 will not have legs.
So under the application to the Takeover panel MGX are asking for a ruling on the shougang share purchase which will be deemed illegal if they are connected to APAC forcing the sale to shougang to be cancelled.
No one can legally own from 20.3% which APAC owned and use a subsidary company to increase their holdings by 18.9% in one hit.
The main thing that MGX are trying to ensure is that no one can come in and say we own zyx% and want x amount of positions on the board and a say in io sales etc.
So the statement "You may not have any say in that if they already hold 40% if they reach 50% acceptance level then its automatically over red rover" is very misleading as they cannot legally hold this amount in the way it has been done and declare any association at all, under creep provisions it would take them 3 plus years to reach the 40%.
So if they have an association under the application by MGX they will have two choices, not proceed with the sale or launch a takeover bid and they will require 90% to reach compulsory acquisition. Remember that if MGX get the orders they are asking for the sale to Shougang cannot proceed so APAC will only hold their 20.3%, which will be the shareholding to launch their takeover from, not 40%.
If they get 50% they may have control of the company but the holder can still hold his shares, which has been beneficial to shareholders in the past.
So to put it simply nothing is over UNTIL it is over and many things will play out before it even gets to this stage.
Who knows what they are thinking, and they have been shown to be willing to pay a healthy premium to secure a company they want. Anything under $4.50 will not have legs.
michael_selway
Coal & Phosphate, thats it!
- Joined
- 20 October 2005
- Posts
- 2,397
- Reactions
- 2
Yeah I sold too early this one I think.
thx
MS
Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 7.1 14.1 39.9 58.7
DPS 0.0 5.0 20.7 33.1
yeh this share was truly manipulated when it was around the .80c -.85c and a lot of investors got impatient and sold,I must admit I had the very same thoughts,but my holding in MGX got a boost from Aztec being taken over by MGX so I went long glad I did
cheers laurie
cheers laurie
