Iscor minorities 'disappointed' with new Mittal offer

Thursday, 30 January 2003, 08:00 Hrs
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JOHANNESBURG: Most minority shareholders in South African steel giant Iscor are disappointed with an increased offer made by Lakshmi Mittal's LNM as the company pursues its bid to take control of Iscor.

LNM Tuesday offered three rands per share more than the earlier offer of 30 rands that minority shareholders had rejected.

The new offer was part of an attempt to raise LNM shareholding in Iscor to 47 percent from its current 35 percent holding.

It was conditional on shareholders voting in favour of a waiver that would release LNM from the local securities exchange regulation of a compulsory offer to minorities if its shareholding exceeded 35 percent.

As dissent against this grew, LNM offered a sweetener by agreeing to make a full offer if its stake reached 60 percent, again making this offer conditional.

When it became clear that LNM would not win support at an extraordinary shareholders meeting at Iscor last week, the company asked for and secured an adjournment of the meeting to February 12 as it engaged in frantic discussions with minorities.

The opposition by the minorities was based on two issues -- some said the offer of 30 rands was too low, while others were concerned about supporting the loophole in local regulations that LNM had found creating a precedent.

Most felt that if the price was right, the second objection would disappear. But LNM's latest offer is still considered too low by most minorities, who see 40 to 50 rands as the point at which they would agree to LNM offer.

The board of Iscor had earlier recommended the offer of 30 rands after being advised by Investec Bank that it was reasonable. But it has now emerged that Investec had recommended a price of between 30 and 40 rands.

LNM has entered into discussions with minority shareholder representatives to determine what would make the offer acceptable.

"The revised offer price represents a premium of about 52.1 percent on the closing price of 21.70 rands on December 2, the last trading date before the original announcement," the company said.

But while most representatives are believed to be unhappy with the latest offer, Old Mutual Asset Management said it would support it, subject to a full offer being made unconditionally when LNM acquires 60 percent of Iscor.

"We have had intensive discussions with LNM over the past month and, to protect minorities, we insisted that a full offer for all shares be made when LNM's interest grows to 60 percent," said Paul Boynton of Old Mutual.

Boynton said his clients held about 13.5 percent of Iscor shares.

This move by Old Mutual may help win over some other minorities who have been concerned about the liquidity of Iscor shares if LNM acquired control.

LNM needs to acquire a controlling interest in the former state-owned Iscor to pass on new technologies. But it is also believed to have agreed with the South African government that it would cap its interest at 60 percent.

In terms of a business assistance agreement, LNM provided a huge cash injection and technical assistance and access to financial markets for Iscor in return or shares granted periodically. LNM is expected to receive more shares next year as this agreement has been successfully met.
Source: IANS
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