OZL - Oz Minerals

[Mofra]

"Both Rio Tinto and Oz Minerals are floundering but the Australian mineral resources they control will not disappear if these companies do"

Australia would lose access to the O/S assets though.

FWIW Early yesterday the March 80c OZL45 calls opened at 6c and traded at 4.5c for a decent amount of time (2c premium to the takeover)- not sure if some ETO goober had their Black-Scholes goggles on or the market was being overly optimistic, but it's nice to find a little scalping oppy here and there

 

[TheAbyss]

Has anyone heard anything about an offer for Matarbe? Apparently if OZl sell Matarbe the Minmetals offer gets increased accordingly due to the increased cash on hand.

Basing this purely on a Sky Business item this morning so could be totally unfounded rumour. A small article here.

http://business.theage.com.au/business/oz-minerals-asset-sale-imminent-20090219-8cla.html

A number of issues at hand in my view,

Negatives

1. Banks need to defer there credit requirements on teh 27th of Feb
2. FIRB approval required
3. A lot of instos are bailing out while they can get something back on their investments hence the massive oversupply of sellers

Positives

1. Minmetals cash offer of 82.5 cents per share
2. Matarbe sale provides additional value
3. Surely the banks would extend terms on the basis of a cash opffer being on the table gioven Minmetals will assume all responsibility for the debt which they have stated in their offer document
4. FIRB approval should be approved on the bassis that if they dont the company goes into admninistration and may not resurface. At least OZl remains in situ as an employer and tax payer.
5. Minmetals have stated that they have the cash to complete the purchase via cash on hand and pre approved funds
6. What if BHP decide they dont like china circling their competitors whioch will reduce there market opportunities?

Any input would be welcome as there will be other positives and negatives i have not listed. Too late for me as i have bought in however am interested in thoughts.

Cheers

 

[sammy84]

At 65c there is a potential to make 27% if the deal go's through. I am yet to find a reason to believe that the deal wont be passed. What are peoples concerns

 

[prawn_86]

At 65c there is a potential to make 27% if the deal go's through. I am yet to find a reason to believe that the deal wont be passed. What are peoples concerns

The fact that a lot of media and politicians are putting pressure on the FIRB to not accept the deal. They dont want Aus assets all going to the chinese

 

[sammy84]

Hey Prawn

I can understand the resistance to the RIO deal, but OZL is another story. Surely anyone opposed to it will accept realities that either this deal gets passed or thousands more are out of job, not to mention the mum and dad shareholders who stand to lose money...

 

[sammy84]

Does anyone out there know the timetable of the OZL and Minmetals deal or where I can find it?

Sammy

 

[UMike]

Hey Prawn

I can understand the resistance to the RIO deal, but OZL is another story. Surely anyone opposed to it will accept realities that either this deal gets passed or thousands more are out of job, not to mention the mum and dad shareholders who stand to lose money...

There wasn't to much concern over the mums and dads that invested in ABC.

Politics .... Hard to judge when and what they care about

 

[jackson8]

Does anyone out there know the timetable of the OZL and Minmetals deal or where I can find it?

Sammy

this is part of an article distributed over the reuturs network which may answer some of your queries

Embattled Australian miner OZ Minerals is believed to be close to agreeing to the sale of two projects, which should allow the company to receive an extension from its lenders. The extension would allow OZ to put a proposed A$3.7 billion takeover deal from China's Minmetals to shareholders in May. The two projects, the Martabe gold project in Indonesia and the Golden Grove mine in Western Australia, are expected to provide OZ with more than A$425 million.

here is the link to the article
http://www.forbes.com/feeds/afx/2009/02/19/afx6073005.html

 

[gfresh]

The timetable is in the initial offer presentation. Shareholder payment would be received June if the deal were to proceed. Next week will be quite crucial -- Monday is when the dd by Minmetals is to be decided, Friday is the original funding deadline for the financiers.

There is always the chance the financiers could block the deal if they thought there was any way for them to profit directly by the assets falling into their hands. Can't really put that past any of the banks.

For the government to block the deal, they would really have to put up or shutup.. in other words, put up debt financing to keep OZL operating in Australia (Rudd bank?), or let it go through to the Chinese. FIRB blocking the deal would effectively be administration for OZL and the instant loss of jobs due to a causal decision, a political hot potato.

 

[TheAbyss]

Does anyone out there know the timetable of the OZL and Minmetals deal or where I can find it?

Sammy

I have extracted out of their market release.

I can't see FIRB saying no as the choices are simple, administration or a working entity employing australians and paying taxes.

Sure, profits lost but that isnt in their baliwick based on past FIRB decisions. The FIRB havent blocked a deal for a very long time (The last time it blocked a bid was Royal Dutch Shell's tilt at Woodside in 2001 - Information taken from this article, http://business.smh.com.au/business/rudds-china-puzzle-20080430-29si.html).

 

[sammy84]

Thanks Abyss, thats exactly what I was looking for.

The asset sales now look promosing given that OZ is no longer in a fire sale situation. This in turn should increase the offer from minmetals. I guess the only draw back from my point of view is the long time frame in which the deal is being completed. Alot can happen in that time and also the opportunity costs needs to be considered. How are you approaching this Abyss?

 

[TheAbyss]

I have made my decision and got in for a few and added more this afternoon.

Real concern to me is the Due Diligence and the banks. I can see enough reason to have a dip but not too heavily.

Tough to get a handle on because of the bias towards sellers (mainly who are looking to cut their losses and get out ).

Normally i would watch the sellers queue and if it swells then bail as there is usually fire beneath the smoke. Here it is a real punt with an upside of 25-40% and a downside of 100% loss.

Each to their own.

 

[Eloise]

Apparently it has been confirmed Golden Grove has been sold, just waiting on the official announcement of who and who the take over begins..

 

[Mofra]

Apparently it has been confirmed Golden Grove has been sold, just waiting on the official announcement of who and who the take over begins..

That's one of the first conditions of an extension of credit. Good short term news (in terms of survival), however does this have on the t/o offer?

 

[TheAbyss]

Due diligence completed as per todays announcement Next step is the banks extending on the 27th which is the only real hurdle as far as i can see.

 

[Pager]

Didn'T want to buy the stock in light of the banks decision but March 70 cent options looked good so bought 6 at 3 cents per contract, total outlay is $180.

If the banks approve everything then could well see it bounce up to near the offer price IMO at around 80 cents, if not well it could be curtains

 

[Mofra]

Didn'T want to buy the stock in light of the banks decision but March 70 cent options looked good so bought 6 at 3 cents per contract, total outlay is $180.

If the banks approve everything then could well see it bounce up to near the offer price IMO at around 80 cents, if not well it could be curtains

Small outlay in dollar terms, however formal acceptance of the scheme of arrangement is due in May; hopefully you get a bounce prior to 26/03

 

[golfmos123]

Interesting all or nothing type play almost in the offering.

Upside - buy this week around 58c. If banks agree to extend credit timelines, I'd expect some sort of bounce as the market begins to think it is going to get 82.5c from Minmetals.

Downside - no credit extension might mean receivership and getting very little back later.

Heads or tails anyone?????

 

[GumbyLearner]

Interesting all or nothing type play almost in the offering.

Upside - buy this week around 58c. If banks agree to extend credit timelines, I'd expect some sort of bounce as the market begins to think it is going to get 82.5c from Minmetals.

Downside - no credit extension might mean receivership and getting very little back later.

Heads or tails anyone?????

It goes to ground or swanny says yes?

No idea...but this isn't no or yes! Swanny thumbs down or up ? No idea!

 

[Iron Man]

thanks guys for a excellent thread.

Just got on the OZL story now lol.

IMO - just buy with tight stops. either it goes or your out. Looks good for me to get in at these prices. It depends on how things unfold with the announcements. eg No and straight in to the can or no and limbo time to get out.

Where do I get options on this Commsec?

That would be the safe way.