The Stakes are real-2Biln for KatangaMERGERS & ACQUISITIONS
Katanga Mining copper/cobalt play far from over
CAMEC’s revised “bid” for Katanga Mining leaves all options open, including a white knight.
Author: Barry Sergeant
Posted: Wednesday , 11 Jul 2007
JOHANNESBURG -
The bid by Central African Mining & Exploration (CAMEC, CFM.L, £0.72 a share) for the 78% it does not already hold in Katanga Mining (KAT.T, C$25.01) has some way to go, according to Arthur Ditto, Katanga Mining chairman, president and CEO.
On Wednesday, CAMEC, which owns a patchwork of copper-cobalt assets in the Democratic Republic of the Congo's Katanga Province, said it was raising its all-paper "bid" for Katanga Mining from 15 CAMEC shares for one Katanga Mining share to 17 to one. The increased offer would value all of Katanga Mining at about £943m (C$ 1.98bn).
Katanga Mining is one of the most advanced brownfields projects in the rapidly re-developing Katanga Province copperbelt, and is going to be the earliest big restart, with metal ready for shipping before the end of the year. Two big peers, Nikanor (NKR.L, £6.22) and Tenké Mining Corporation (TNK.T, C$24.00), owned 57.75% by copper giant Freeport McMoRan (FCX, $90.00), are only likely to ship metal in 2009 and 2010, respectively.
On Wednesday CAMEC said it had entered into agreements with "certain shareholders" representing some 32% of the outstanding shares in Katanga Mining. CAMEC also announced that "following the conclusion of the [CAMEC] offer, Georges Forrest, the current vice chairman of Katanga [Mining] and its largest individual shareholder, will become CAMEC's largest shareholder". Forrest indirectly holds some 24.5% of Katanga Mining.
Ditto, also a material shareholder in Katanga Mining, has not committed any of his shares to CAMEC. Ditto argued that the CAMEC offer (the third in the past few days) may be a bit premature, given that CAMEC's offer documentation is only "expected to be posted to Katanga shareholders in August, 2007".
Ditto also pointed out that Forrest's options remained wide open, and that he was free to accept any superior offer that may materialize. Ditto confirmed that more than a few interested parties had expressed interest in Katanga Mining in the past while. A spokesman for Forrest also confirmed that Forrest had received a number of shows of interest in recent months. It has been widely speculated that at least one of the world's major mining groups has recently taken a very close look at Katanga Mining, and may yet materialize an offer.
There are also other material shareholders in Katanga Mining. Late last month, RP Explorer Master Fund (RPEMF) said it had purchased some 6% of Katanga Mining, taking its total stake to 15.7%. The RPEMF transaction manifests the interest, directly or indirectly, of Israeli businessman Dan Gertler in Katanga Mining, via RP Capital Partners Cayman Islands. Gertler is a founding shareholder of Nikanor.
CAMEC earlier acquired a 22% stake in Katanga Mining, according to announcements on April 27 and May 4. The entities that agreed to swap Katanga Mining shares for Camec shares comprised three US investment fund managers, two UK investment fund managers, and two other funds. It is no secret that the funds, particularly London-based RAB Capital, are keen to "hedge" their holdings in CAMEC, given the sudden high profile focus on CAMEC shareholder Billy Rautenbach, a fugitive in South Africa.
In a press release, Victor Kasongo, deputy minister of mines in the DRC, referred to CAMEC and stated that the company "uses business practices which are not in alignment with international corporate governance standards". It is no secret that CAMEC's assets in the DRC were acquired from Rautenbach, who appears to have acquired the assets, in turn, under dubious circumstances.
Kasongo also stated, referring to CAMEC, that: "While under investigation for the initial Rautenbach/CAMEC transaction, the company has made hostile moves toward its competitors through an unsolicited purchase of a large portion of shares in Katanga Mining, a publicly listed company".
Watch this space.
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