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xstrata vows to vote against tampakan

  1. 1,645 Posts.
    Xstrata must be starting to shite themselves.

    Xstrata vows to vote against Tampakan
    AdvertisementEmail Print Normal font Large font October 31, 2008 - 2:56PM

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    Indophil Resources NL's plan to sell its stake in the Tampakan copper project in the Philippines will be blocked by its largest shareholder, Xstrata, which says the proposal exposes shareholders to a potential loss of value and lacks clarity.

    Xstrata owns 19.9 per cent of Indophil and the Tampakan project is Indophil's only major asset.

    Indophil is putting a resolution to its shareholders to sell its 34.23 per cent interest in Tampakan at a November 12 general meeting.

    Xstrata said it objected to the lack of clarity over the terms of a sale agreement with Philippine group Alsons Corporation.

    The Swiss mining giant said it wanted a competitive sale process and only when it had received a definitive, acceptable proposal should shareholders be asked to approve the sale.

    Indophil entered into a memorandum of intent with Alsons on September 29, saying the consideration was "at an equivalent value to $1.28 per share".

    This translates to $503.2 million, roughly a quarter of Indophil's current market capitalisation.

    Xstrata said Indophil's board could elect to sell the project interest at less than $1.28 per share if the resolution was approved.

    It said Indophil could retain proceeds from the sale for corporate purposes, rather than returning them to Indophil shareholders.

    "A sale could trigger a large tax liability for Indophil shareholders or Indophil or both," Xstrata said in a statement.

    "The Indophil board is seeking shareholder approval to provide it with an open-ended mandate to sell the company's only major asset.

    "The resolution proposed by the Indophil board exposes shareholders to potential loss of value and lacks clarity in a number of key areas, including price, timeframe, whether and how cash would be returned to shareholders and the funding arrangements of any purchaser given the financial market crisis.

    "Given this uncertainty, Xstrata intends to vote against the resolution."

    Xstrata Copper chief executive Charlie Sartain said any sale should proceed only if it was at "a definitive, acceptable price, in a manner that returns cash to shareholders in a tax-efficient and timely manner".

    "As the manager and majority owner of the Tampakan project, we would welcome Alsons' increased participation in the project," Mr Sartain said.

    "However, we are not prepared to give the Indophil board free rein to sell the company's only major asset at an undisclosed price and on undisclosed terms.

    "No shareholder should be asked to give a board such an ill-defined, wide-ranging mandate.

    "Only when the Indophil board has run a competitive sale process and only when it has received a definitive, acceptable proposal should shareholders be asked to approve the sale."

    Alsons is backed by Hong Kong investment bank Crosby Capital.

    Indophil said in its September quarter report on Friday that it expected to spend $3.5 million on exploration, evaluation and development in the December quarter.

    It had $83.74 million in cash at September 30.

    Indophil shares were steady at 55 cents at 1449 AEDT.

    © 2008 AAP

 
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