OZ Minerals chairman Barry Cusack has directly addressed the company’s shareholders for the first time since September last year, telling them why Chinese company Minmentals’ $2.6 billion takeover bid is their best option.
“After full consideration of all other alternatives, the Board determined that Minmetals’ all-cash proposal represents the best available outcome for shareholders,” he said.
Cusack warned that given OZ Minerals’ grim financial position it was possible the company could be placed into voluntary administration or receivership if the Minmetals deal did not proceed.
“In the event that the Minmetals’ proposal does not proceed, there is a material possibility that OZ Minerals will not be able to continue as a going concern,” he said.
OZ has requested an additional bridging loan as a contingency plan pending approval of the Minmetals deal, OZ Minerals Relations Manager told MINING DAILY.
Discussions with banks have been constructive all along and OZ expects that to continue, Foran said.
Cusack blamed much of OZ’s financial problems on falling commodity prices and increased capital expenditure.
“OZ Minerals’ cash position has declined considerably from mid-2008, largely as a result of the combined effect of lower commodity prices and high capital expenditure on a number of development projects,” he said.
OZ spent considerable amounts on both its Prominent Hill and Century mines, while failing to sell assets such as its Martabe gold project and Golden Grove copper-zinc mine.
A significant factor in Minmetals’ takeover deal is the fact that it has agreed to pay all of OZ Minerals’ outstanding debt within two weeks of its completion.
This will provide the company and its shareholders with some financial security in an uncertain market, Cusack said.
“The Board concluded that, unlike nay of the other alternatives considered, the Minmetals proposal would also deliver a complete solution to OZ Minerals’ refinancing issues.
“The all-cash proposal provides shareholders with certainty in a highly volatile and unpredictable economic environment.”