06/06/2008 - 13:57

Sinosteel extend Midwest deadline

06/06/2008 - 13:57

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Chinese steelmaker Sinosteel has laid out a further threat to Midwest Corporation Ltd's proposed merger with Murchison Metals Ltd, extending its takeover deadline by over a month.

Chinese steelmaker Sinosteel has laid out a further threat to Midwest Corporation Ltd's proposed merger with Murchison Metals Ltd, extending its takeover deadline by over a month.

The company announced it had extended the closing time for its $1.36 billion bid for Midwest from June 13 to 5pm Western Australian time on July 18.

The extension comes in the wake of Sinosteel increasing its stake in Midwest to 40.09 per cent from 33.82 per cent previously.

Sinosteel is offering $6.38 cash for each Midwest share, which was declared unconditional last month, and has previously stated that it will not increase its offer.

Murchison last month proposed a reverse takeover for Midwest that was engineered to prevent Sinosteel, which at the time held 19.89 per cent of Midwest, from blocking the deal.

The reverse takeover is structured so that Midwest only requires 50.1 per cent of votes cast in favour of the merger to approve the deal.

Sinosteel, however, may only need 45 per cent of Midwest to block the takeover if Murchison is unable to use its 9.98 per cent stake in the target to vote in favour of the planned merger.

The Chinese trader also has a 2.4 per cent stake in Murchison.

Murchison's largest shareholder Harbinger Capital Partners has a 9.11 per cent stake in Midwest.

Murchison and Midwest operate modest iron ore mines in Western Australia's mid-west region and want to develop much larger operations, depending on the construction of supporting infrastructure.

 

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