06/01/2006 - 14:40

Tethyan hits back at Skafell

06/01/2006 - 14:40

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Tethyan Copper Company today hit back at Skafell Pty Ltd through a letter to Tethyan shareholders as the takeover tension between the two companies heats up.

Tethyan Copper Company today hit back at Skafell Pty Ltd through a letter to Tethyan shareholders as the takeover tension between the two companies heats up.

The Tethyan letter from chairman David Humann seeks to rebut a number of issues raised by Skafell over Tethyan's recent joint venture agreement with Chilean copper company Antofagasta.

Amongst other things, Skafell had been critical of Tethyan for hurrying into the deal with Antofagasta.

In response, Tethyan pointed out that the Antofagasta announcement was preceded by months of work involving site visits in Pakistan, face to face negotiations in London, Santiago, Sydney and Perth, and detailed contractual negotiations with lawyers, tax advisers and investment bankers.

Tethyan also strongly countered Skafell's assertion that the Antofagasta deal would dilute shareholder value, claiming that one of the main strengths of the joint venture agreement was the protection of shareholder value.

In addition to the anti-dilutionary nature of the Antofagsta proposal, the Tethyan letter also states that it will be a 50-50 joint venture partner with Antofagasta with equal voting rights.

This is contrary to Skafell's claim that Tethyan would be relegated to the status of a 'mere holding company'.

Tethyan also uses the letter to clarify its position on criticisms of Antofagasta's credibility and claims about its funding obligations, saying, "the Antofagasta deal gives Tethyan, through the quality of our partner, the financial and operational backing to actively participate in the development of one of the world's largest undeveloped copper deposits".

The Tethyan Antofagasta deal remains subject to shareholder and regulatory approval, and the Tethyan board continues to recommend shareholders accept the transaction over the Skafell proposal.

Tethyan will send an Explanatory Memorandum to shareholders this month in preparation for an extraordinary general meeting expected to be held before the end of February to vote on the Antofagasta proposal.

In its attack on Skafell, Tethyan point to the fact that in the seven months since Skafell's bid it has attracted acceptances of less than 1 per cent giving it a total stake in the company of only 1.31 per cent.

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