OZL - Oz Minerals

[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

Some good progress to date.

Negatives

1. Banks need to defer there credit requirements on teh 27th of Feb - Completed. Only hurdle left is the FIRB and China approvals as the extension grant infers that the banks are happy with Minmetals assuming responsibility of debt. I am assuming shareholder approval also.
2. FIRB approval required -Yet to see a reason why approval wont be granted as these assets are tier two and not against the national interests (although the whole foreign investment process should be reviewed as we will all pay a price for this in time but thats another topic). Rio is a different story and may not get across the line but this will imo
3. A lot of instos are bailing out while they can get something back on their investments hence the massive oversupply of sellers. Buyers sellers ratio has improved dramatically.

Positives

1. Minmetals cash offer of 82.5 cents per share
2. Matarbe sale provides additional value - No sale news. May start to happen now that the debt issue has been cleared. This is on the basis that any potential bidders may have been biding their time on the chance a firesale may have been caused by a bank refusing to extend. Any bidder will now need to make an on market bid
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 - Correct
4. FIRB approval should be approved on the basis 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. - We shall see
5. Minmetals have stated that they have the cash to complete the purchase via cash on hand and pre approved funds- And have stated they will refinance the $1.2 billion debt which is why the banks extended. A further two weeks extension will be required for paperwork etc as outlined by Oz. Call it a bridging loan where time is the product.
6. What if BHP decide they dont like china circling their competitors which will reduce there market opportunities? - Yet to be seen however now that the finance question is out of the wy the odds have shortened although i am thnking BHP are hopeful of the FIRB saying no to the Rio Chinalco deal and picking up some Rio assets on the cheap.

All in all this is a lot closer to fruition than it was on monday and a lot of the risk has been removed hence the 25% SP increase since wednesday.

 

[TheAbyss]

Further to the above after reading the report and some press OZ have made good progress on thje sale of Martabe and Golden Grove. Both deals done within a week.

Positive news for holders will be if the gross sale price is above $425 m Minmetals will increase their 82.5 cents per share offer.

Subject to FIRB and shareholder approvals.

 

[bigdog]

Being a OZL shareholder; today OZL emailed me:

Dear Shareholder

OZ Minerals 2008 Full Year Financial Results

OZ Minerals today released its full year financial results. It was also pleased to announce that its financiers have provided approval of an interim extension to its debt facilities to 31 March 2009, as part of the Minmetals transaction approvals, subject to documentation.

Key points from the announcement were:

* Full year revenue of $1,218.4 million.

* Net loss after tax, before write-downs and other adjustments was $66.4 million.

* Revenues from individual operations were lower due mainly to significant falls in commodity prices.

* Results were impacted by a number of one-off costs associated with the merger of Oxiana and Zinifex, restructuring costs and significant impairment of assets and other asset write-downs.

* After these post tax asset write-downs of $2,309.8 million including post tax one off costs of $265.5 million the net loss after tax was $2,484.9 million.

* 2008 production targets largely achieved at operations.

* Operating cash costs of all operations remain competitive.

* Significant reduction in capital and operating costs for 2009.

* Refinancing solutions advancing with announcement of the recommended offer by China Minmetals.

* OZ Minerals’ financiers have provided approval of an interim extension of its debt facilities to 31 March 2009 subject to documentation.

* No final dividend declared as a result of lower earnings in order to conserve cash.

 

[bigdog]

ABC Inside Business Sunday Feb 22, 2009

Andrew Michelmore joins Inside Business

Alan Kohler is a great market commentator.

http://abc.com.au/news/video/2009/02/22/2498034.htm
watch video interview

http://www.abc.net.au/insidebusiness/content/2007/s2498034.htm
read script of interview below

ALAN KOHLER, PRESENTER: Well to put some perspective on China's current appetite for cheap commodities businesses this week's $2.6 billion bid for debt stricken Oz Minerals was only a small part of the $80 billion investments China has committed to around the world in the past 10 days. The all cash bid for the nation's third biggest diversified miner is a startling capitulation for a company which when put together only nine months ago was valued at almost $12 billion. Had $2 billion in cash and a strong portfolio of metal reserves.

I spoke to Oz Minerals chief Andrew Michelmore earlier this week.

Well Andrew Michelmore is it fair to say that this is Min Metals or bust? That if this deal doesn't go through OZ Minerals is in receivership?

ANDREW MICHELMORE, CEO, OZ MINERALS: Alan, absolutely at this point in time having stared down the barrel of receivership or voluntary administration at least three times in the last few months, this is the best outcome for our shareholders.

ALAN KOHLER: You mean the only outcome?

ANDREW MICHELMORE: Well we've looked at all options of how we can do it and they are very complex, we have to replace effectively $1.1 billion minimum of debt through sales through raising some funding through equity through commodity link things, all very complex and you have to put them all together in the one place at the one time to be able to deliver it.

ALAN KOHLER: And you still need the banks to extend don't you

ANDREW MICHELMORE: Absolutely in all cases.

ALAN KOHLER: Are you confident that they will?

ANDREW MICHELMORE: Logic says this is a fantastic outcome for them it solves their problem, yes they should extend.

ALAN KOHLER: But have they shown so far that they will?

ANDREW MICHELMORE: Look I think some of them, particularly the offshore banks, are required to get those funds home as soon as possible, they have been told, pull it back, don't care what it means, pull it back and I think that's where the difficulty will come. It won't be easy but again logic says this guarantees you an outcome, you get all your cash back and with a company that has got the funds to do it, it's not subject to financing and so yes logic says you should do it.

ALAN KOHLER: And you put the company on the market effectively a while ago, how many potential buyers kicked the tyres?

ANDREW MICHELMORE: We had lots of buyers kicking tyres of individual assets, they thought it was a fire sale pick up absolute bargains but we had to raise a certain amount of money, in terms of looking at the whole company, we've had people looking at bits of equity in the company and that's where Min Mets started they look at taking a placement; a cornerstone placement and as they did more and more due diligence they said no actually we want the lot, so this is the only one that has come for the lot.

ALAN KOHLER: And as and you reflect on what's happened here in the past sort of 12 months of roller coaster riding that you've been through, do you wish you hadn't bought Allegiance Mining?

ANDREW MICHELMORE: Oh gee if I had my time over again you would say no way, if I knew that the metal prices were going to be down at this level, you know our long term metal prices for nickel was at least $7.50 not sitting at the levels like this, no there's no way you could justify Allegiance at the moment.

ALAN KOHLER: But about nine months after you paid 55 per cent premium for Allegiance you closed its main operation Avebury Mine in Tasmania saying that it wasn't profitable, I mean that's incredible destruction of value isn't it?

ANDREW MICHELMORE: Look I think from September into October, November the amazing drop, the speed with which commodity prices dropped, the view on the outlook of those commodities going forward totally changed the long term view and the instantaneous prices, copper's off 68 per cent, zinc fell another 44 per cent, nickel came off around 60 per cent as well and more importantly the whole view of the confidence going forward for those commodities disappeared. That was the basis, the long term basis going forward in demand for the nickel evaporated.

ALAN KOHLER: I mean I don't want to dwell on Allegiance, that was your decision the Zinifex Oxiana merger had been announced at that point but you didn't you decided to go ahead and buy Allegiance?

ANDREW MICHELMORE: I was certainly CEO as that decision had been made, I started in February the decision had been made in December...

ALAN KOHLER: So you did inherit the decision?

ANDREW MICHELMORE: The decision was made in December and I was aware of that decision being made through that period, I took up as CEO the 1st of February but that information being provided to me, everything looked sensible, that was a sensible investment.

ALAN KOHLER: Shareholders presumably would say well that's what we pay CEO's and boards for is to ok, so things changed, it was, obviously the entire world has changed, but you pay people to make decision that are correct at the right time not to overpay for assets at the top of the cycle?

ANDREW MICHELMORE: Your comment there, correct at the right time and you can only go with the information you have at the time so decisions you are making now have to be judged in the circumstances we have now and the outlook, decisions made back then...

ALAN KOHLER: So that deal probably ate about half the cash that was in the company, close to half, where did the rest go?

ANDREW MICHELMORE: Yes when we merged the company we had about $900 million of cash on the books we paid $150 to $160 million on dividends, we've paid about $250 million on Prominent Hill on completing, just in that period, the construction of that project, we've got a large investment in the cut back at Century so key components, and we've also invested in Martarbe and Sepon expansion so it was in all the expansion in the capital expenditure sides of the business which was our platform, it was putting the two together, provided the projects on one side and the cash to be able to finance that growth.

That all changed in October, the change from September to October in terms of expected revenue in the following year was over a billion dollars, that is unbelievable to happen in such a short period of time.

ALAN KOHLER: In fact it seems from the outside to be one of the great corporate tragedies this; for a company to go in nine months from about $4 a share price and having a whole lot of money in the bank to broke, it is amazing.

ANDREW MICHELMORE: It is amazing and the issue was that our commitment to our gearing back then was very low. Even at the moment you would say for this deal it shows gearing of about 30 per cent. That would be typical at the peak of the market and if you think of how much we've dropped it shows you the strength of the company that we are actually in that position.

What we've been hit with is a short term liquidity squeeze because we have those key investments, particularly Prominent Hill and Century which once completed then generate cash so we had this hump of need of extra cash which comes back second half of the year.

ALAN KOHLER: Do you know whether Min Metals is going to keep you on?

ANDREW MICHELMORE: I guess at this stage they are saying they want all the management, they are buying a total team, but nothing in writing. My job at the moment, number one, number two, number three is focussed on delivering best returns for the shareholders, actually make sure we don't go into receivership.

ALAN KOHLER: And do you know how corporate governance works with companies like the estate owned Chinese firms, how will they actually run it?

ANDREW MICHELMORE: Look all the information I have is they want this as their offshore vehicle to grow their base metals business, they have a number of entities that they have to report back to and they are very committed to corporate governance.

ALAN KOHLER: And do think they'll use it as a base to make more acquisitions in Australia?

ANDREW MICHELMORE: I certainly think so, I think they are going to see this as a platform to really grow their business, they get assessed on what return they generate on the funds they've been able to put in. So they're not interested in special deals selling our products at lower prices they actually want the best prices out of them it generates the best return, they get support.

ALAN KOHLER: So you can see them making more takeovers in Australia?

ANDREW MICHELMORE: Look I can certainly see them as we settle everything down it's going to be a number of months down the track to do that. The question then will be with the base we've got the things we've had to cut back what should we be doing actually now that we've got the finance to be able to do them? What really adds value to the company, in addition to that they'll be looking at what's outside that could add value.

ALAN KOHLER: You might be doing it for them. With all this Chinese money.

ANDREW MICHELMORE: I could be but my first focus is we've got to deliver this for our shareholders and our employees, our suppliers all our stakeholders.

ALAN KOHLER: Thanks for joining us Andrew Michelmore.

ANDREW MICHELMORE: Thanks Alan.

 

[bigdog]

Possible sale to former OZ officiers!!!

http://business.smh.com.au/business/hegartys-tigers-in-battle-to-buy-ozs-gold-20090310-8u5i.html

Sydney Morning Herald article today

Hegarty's Tigers in battle to buy OZ's gold
Jamie Freed
March 11, 2009

OZ MINERALS is talking to more than one potential buyer of its Martabe gold project in Indonesia because of the inability of a leading candidate, the Owen Hegarty-backed Tigers Gold, to obtain enough funding for the $210 million purchase.

Tigers was established on December 5 by Oxiana's former company secretary David Forsyth. The previous day OZ, the merged Oxiana-Zinifex, disclosed the full extent of its refinancing difficulties and began accepting expressions of interest in its assets.

Mr Hegarty, the former head of Oxiana, resigned from the OZ board two weeks later. He joined the board of Tigers, a private company, last month.

OZ was unable to clarify whether Tigers was already in negotiations to buy Martabe when Mr Hegarty left, citing confidentiality agreements with potential buyers of assets.

OZ's chief executive, Andrew Michelmore, recently told the market he expected the sale of Martabe would be completed by the end of last week. But the Herald has now been told a sale is not "absolutely imminent".

OZ has yet to announce the sale of Martabe or its Golden Grove mine. It has until March 30 to convince its banking syndicate to give it a final extension that would allow China Minmetals to proceed with its $2.6 billion bid for the company. The deal remains subject to Foreign Investment Review Board approval.

The Herald understands OZ had some aspects of exclusivity in its negotiations with Tigers, but it is now more open to considering alternative offers since Tigers's funding has so far failed to materialise. Multiple buyers remain interested in Martabe and Golden Grove.

Tigers is believed to be seeking funding from institutional investors, but despite the attraction of gold, it is difficult to obtain funding in this market. In addition to the purchase price, it will cost an extra $345 million to complete the construction of Martabe.

Although many goldminers, including Newcrest Mining, Lihir Gold and Barrick Gold, have strong balance sheets, the nature of the resource and the operating situation in Indonesia are believed to have deterred some potential buyers.

Tigers, which appears to have been gearing up for a public listing, cites its registered office as the accounting firm of Barassi & Co in Melbourne. Mr Hegarty has had previous business relationships with the firm's head, Ken Barassi, and his cousin, the football legend Ron Barassi.

Another company linked to Mr Forsyth registered the domain name www.tigersgold.com in January.

Mr Forsyth, who now works at Citadel Resource Group alongside Mr Hegarty and the former Oxiana chief financial officer Jeff Sells, said he was unable to comment about Tigers interest in Martabe. A potential listing of Tigers was dependent on "a number of factors", he said.

OZ shares closed 5c higher at 62.5c yesterday, well below the 82.5c on offer from Minmetals.

 

[bigdog]

Looks like we may get a higher price for Martabe!!!

The HeraldSun reported today in addition to the article below, that Oxiana acquired Martabe for $415 million in 2007 by buying Agincourt Resources.

Business Spectator reports:
http://www.businessspectator.com.au/bs.nsf/Article/International-player-eyes-OZ-Minerals-Martabe-asse-$pd20090314-Q525P?OpenDocument

International player eyes OZ Minerals' Martabe asset
By a staff reporter

An international player has emerged as a potential buyer for OZ Mineral's Martabe gold project in Indonesia, putting pressure on former Oxiana chief Owen Hegarty's quest to reclaim the project.

According to the Herald Sun, while Mr Hegarty is still the front runner for the $345 million project owned by debt-laden OZ Minerals, a rival bidder has delayed completion of the deal.

The paper says one of the four North American precious metals miners - Coeur d'Alene, Sunshine Precious Metals, La Mancha Resources and Silver Standard - may be the late entrant for the asset. Another possibility is Canadian gold royalty company, Franco Nevada.

Mr Hegarty was the chief executive of Oxiana until it merged with Zinifex last year to create Australia's third-largest mining group.

But the merger has not gone well, with OZ recently posting an annual net loss of $2.48 billion, and telling investors the company would fall into the hands of receivers if a takeover offer by Chinese Minmetals did not proceed.

OZ shares closed at 61.5 cents on Friday.

 

[fighting41]

Could someone please tell me what will be the outcome for the shares I own if the Chinese offer gets through?

Does it mean they will be buying/taking the shares I own in Oz and I will only get $0.825 for them and have no say if I am able to keep them or not?
Thanks in advance

 

[oldblue]

Shareholders will vote on the proposal if/when it gets approval.( See OZL ASX announcement today.)
If passed, we all get bought out at 82.5c or maybe a bit more if the two assets which are "under offer" fetch good prices.
Looking on the bright side, the alternative if financiers play hardball is that OZL goes into administration and assets get sold, probably at fire-sale prices. I doubt that there'd be 82.5c ps left after that but that's just IMO.

 

[fighting41]

Thanks mate.

I hope some of the directors that led us down this path won't even be able to flip burgers at Maccas

 

[bigdog]

The OZL SP is down 3.5 cents to 57.5 at 12:13 PM today

News reported today:

http://www.marketwatch.com/news/story/dj-oz-minerals-seeking-further/story.aspx?guid={E98817B6-E289-4388-8823-007C63120474}&dist=msr_5

DJ OZ Minerals Seeking Further Bridging Finance

Last update: 6:09 p.m. EDT March 16, 2009

MELBOURNE, Mar 16, 2009 (Dow Jones Commodities News via Comtex) -- OZ Minerals Ltd. (OZL.AU) said Tuesday it is seeking further bridging finance from its lenders to cover any cash requirements that may arise during the bid period for the A$2.6 billion takeover offer from China Minmetals Nonferrous Metals Co.

A spokesman for the miner said it is in talks with its existing lenders on a new facility that could be drawn on to meet any cash requirements that may emerge during the offer period.

"We are seeking an interim financing arrangement just to be on the safe side," he said.

"It is a contingency plan in the event that the approval process takes longer, commodity prices come off or there is any delay in the asset sales programs."
OZ didn't disclose the amount of interim financing it is seeking.

The miner's lenders last month granted it an extension until March 31 on its A$1.3 billion worth of loans and OZ is in talks for further extensions to allow the Minmetals deal to be completed.

OZ is seeking an extension of its loans to Sep. 15, which is two weeks after the Minmetals scheme of arrangement will terminate if it hasn't been implemented.

-By Alex Wilson, Dow Jones Newswires; 61-3-9671-4313; lex.wilson@dowjones.com

 

[sammy84]

Looks like another sell off is underway approaching fridays FIRB decision. I still see no reason why the FIRB wont go ahead. This could be a good opportunity to buy on the back of everyone else's fear.

 

[bulli]

OZL in trading halt pending an announcement it expects to make today regarding the status of regulatory approvals in relation to teh proposed aquisition of shares in the Company by China Minmetals Non-Ferrous Co. Limited

 

[bigdog]

ASX ANN

23-03-2009 06:30 PM OZL Minmetals Offer Update - FIRB extends evaluation period
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00938792

Minmetals Offer Update - FIRB extends evaluation period by up to 90 days

OZ Minerals has today been advised that the evaluation period for consideration of the application by China Minmetals Non-Ferrous Metals Company Limited (“Minmetals”) for approval to acquire all the shares in OZ Minerals under the Foreign Acquisitions and Takeovers Act (“Act”) has been extended by up to 90 days from 24 March 2009.

OZ Minerals understands the requirement for proper process to be followed and will continue to work co-operatively with the Foreign Investment Review Board. It is in the interests of OZ Minerals, its shareholders, employees and all its stakeholders that the Minmetals’ application is determined as soon as possible.

As previously advised, OZ Minerals is seeking an extension for the refinancing date for certain of its banking facilities until 15 September, which is two weeks after the End Date, being the latest implementation date currently permitted under the Scheme Implementation Agreement (“SIA”) with Minmetals. This time period was set under the SIA to allow for the contingency that the evaluation period under the Act may be extended beyond 30 days. OZ Minerals will continue negotiations with its lenders to achieve the extension required.

 

[jman2007]

As previously advised, OZ Minerals is seeking an extension for the refinancing date for certain of its banking facilities until 15 September, which is two weeks after the End Date, being the latest implementation date currently permitted under the Scheme Implementation Agreement (“SIA”) with Minmetals. This time period was set under the SIA to allow for the contingency that the evaluation period under the Act may be extended beyond 30 days. OZ Minerals will continue negotiations with its lenders to achieve the extension required.

Er...

Isn't this a really bad outcome for the company? Sounds like they FIRB have basically just dusted their hands of these guys and chucked them into the arena with the lions. I wonder why the FIRB need another 90 days?

If the banks don't play along with this, then isn't administration a real risk here?

jman

 

[UPKA]

Er...

Isn't this a really bad outcome for the company? Sounds like they FIRB have basically just dusted their hands of these guys and chucked them into the arena with the lions. I wonder why the FIRB need another 90 days?

If the banks don't play along with this, then isn't administration a real risk here?

jman

If u've been reading the news, its been the same for FMG and RIO's deal. extension doesn't mean its a "no". so its still good, plus UBS just upgraded OZL from HOLD to BUY, as they have better than even's change to get approval from FIRB. wats more important now is for the creditors to extend OZL's refinance deadline.

 

[YELNATS]

Er...

Isn't this a really bad outcome for the company? Sounds like they FIRB have basically just dusted their hands of these guys and chucked them into the arena with the lions. I wonder why the FIRB need another 90 days?

If the banks don't play along with this, then isn't administration a real risk here?

jman

I suspect that OZL probably expected this outcome, so although it's not goods news, neither is it particularly bad either.

Bureaucrats never like to make quick decisions if they can avoid them. It's just another necessary step in the process.

Let's see if the market judges it the same way when they come out of their halt.

 

[jman2007]

wats more important now is for the creditors to extend OZL's refinance deadline.

And your last statement is exactly what I'm getting at

I'm not a holder of this stock, and no I haven't been following the news that closely. I'm just trying to guage other holder's opinion of this announcement. But grouping FMG and RIO in the same boat seems a little optimisitc to me. Personally I can't see the creditors beaming with joy at this announcment.

Purely an outsider's view looking in.

jman

 

[Taltan]

I'm no PR expert but if I was at OZL I would get out there today with some soon to be retrenched workers and phoning Fairfax & News for a front page splash of how Jo Blo will lose his house because of the FIRB. Get it as a big story on both papers and I would think Rudd would urge them to take less than 90 days.

 

[bigdog]

ASX ANN
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00939848

27 March 2009 OZ Minerals Limited TRADING HALT

The securities of OZ Minerals Limited (the “Company”) will be placed in pre-open at the request of the Company, pending the release of an announcement by the Company. Unless ASX decides otherwise, the securities will remain in pre-open until the earlier of the commencement of normal trading on Tuesday, 31 March 2009 or when the announcement is released to the market.

 

[bigdog]

http://www.news.com.au/perthnow/story/0,21498,25249818-951,00.html?from=public_rss

OZ in trading halt on debt extension
Article from: AAP

March 27, 2009 08:43am

OZ Minerals shares have been placed in a trading halt as the debt-laden miner seeks an extension to refinance $1.3 billion of debt due Tuesday.
The debt-laden miner said on Friday its shares would remain in a trading halt until Tuesday, March 31, or when an announcement is released to the market.

OZ Minerals, which is the focus of a $2.6 billion takeover by Chinese state-owned Minmetals Non-ferrous Metals Company Ltd, requires an extension to its debt refinancing to stay afloat.

The Foreign Investment Review Board (FIRB) on Monday extended its review of the Minmetals takeover by 90 days after the initial 30-day period expired on Saturday March 21.

OZ Minerals shares last traded at 55.5 cents.