Debt-laden Australian miner OZ Minerals Ltd (OZL.AX: Quote), which this week agreed to a $1.7 billion takeover by China's state-owned Minmetals, may still attract counter bids for some of its mining assets.
Rival offers are likeliest to come from among the six parties that looked at OZ Minerals' assets after it put itself up for sale late last year faced with refinancing $560 million of debt.
Those parties include Swiss resources trading firm Glencore [GLEN.UL], U.S. private equity firm Apollo Management [APOLO.UL], U.S.-based specialist private equity firm First Reserve Corp, and China's Citic Group, sources familiar with the process told Reuters.
You could potentially still see, in the time between now and the completion of the transaction between Minmetals, certain assets being sold, one source close to the sale process said.
The source declined to be identified as the discussions were confidential.
OZ Minerals has said it would continue to pursue the sale of its undeveloped Martabe gold and silver mine in Indonesia and the Golden Grove zinc and copper mine in Australia.
Those processes are getting quite advanced, the source said, declining to name likely buyers, but saying parties who had expressed interest in OZ Minerals' assets were most likely to get the two mines.
If OZ can sell the two assets for at least A$425 million, Minmetals is required to pay the difference between the net sale proceeds and A$400 million to OZ shareholders. But Minmetals must approve the sale of any other assets to rivals.
Investors do not expect a rival bid for OZ Minerals as a whole, reckoning the Minmetals offer is the cleanest.
OZ Minerals share price jumped sharply on Tuesday after it had been suspended for more than 11 weeks, but was well below the Minmetals offer price of 82.5 cents, and the stock dropped more than 2 percent, to 63 cents, on Wednesday.
Analysts attributed the muted share price reaction to the extended timetable to complete the Minmetals takeover and to uncertainty over Australian government approval for the deal.
Winning approval from Australia's Foreign Investment Review Board (FIRB) is one of several conditions of the deal. The FIRB is also now looking at a near-$20 billion investment by China's state-owned Chinalco in Anglo-Australian miner Rio Tinto (RIO.AX: Quote) (RIO.L: Quote).
It may be easier for FIRB to approve this deal, and then not approve the Rio/Chinalco deal, said a banking source familiar with both Rio and OZ Minerals.
Another key to the Minmetals deal is for OZ Minerals' lenders to approve it, but this is seen as a formality as cash from the takeover will pay off all OZ Minerals' debt.
All the banks will get paid out. It's a cleaner solution compared to asset sales, said the banking source, who asked not to be named due to the sensitive nature of the process.
UBS advised Minmetals, while Calburn Partnership, Goldman Sachs JB Were and Gryphon Partners are advising OZ Minerals. ($1=A$1.08) (Editing by Ian Geoghegan) ((email@example.com; +61 2 9373 1812; Reuters Messaging: firstname.lastname@example.org))
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