JOHANNESBERG: The board of Iscor has recommended to its minority shareholders that they accept a partial offer by Mittal's LNM Holdings, in terms of which LNM will acquire a further 12.19 percent stake in the company. LNM holds 34.81 percent of Iscor shares, and is set to get another five percent within the next year in terms of a business assistance agreement with Iscor. LNM bailed out the ailing former state owned company with a huge cash injection and the agreement last year, when the original Iscor was split into the steel company Iscor and the mining company Kumba. In terms of the agreement, LNM would acquire further stakes in Iscor if its technical support to improve efficiencies and improved access to world markets were successful. This has been happening. When it acquires the extra shares, LNM would pass the 35 percent stake that would oblige it, in terms of the South African Securities Regulation Code, to make an offer to minority shareholders. LNM has done this now to avoid having to do it quickly when it gets the business assistance shares. In an unusual step, LNM has made the partial offer conditional to the minority shareholders and the South African regulatory authority waiving the requirement that a full offer to minorities is triggered when 35 percent of a company's listed shares are acquired. The Iscor board, with Mittal, his son Aditya and another LNM representative, S. Maheshwari, excusing themselves, has recommended to shareholders that they vote in favour of the waiver resolution at a meeting to be held January 22. But the Iscor board, while sanctioning the acceptance of the partial offer, warned shareholders to be aware that it would, together with the issue of the remuneration shares, enable LNM to acquire control of Iscor over time. The offer by LNM is for 30 rands per Iscor share, a significant premium on the current value of 20.9 rands. Analysts said that it would be to the benefit of smaller investors to take advantage of this. But whether all minority shareholders will use the offer is doubtful, as the Industrial Development Corporation (IDC), which holds a nine percent shareholding, has indicated that it would hold onto its shares. The issue of LNM taking full control of Iscor is a sensitive one, as there has been reported resistance by the South African government to foreign acquisition of a key industry. Besides the IDC, Trade and Industry Minister Alec Erwin has also expressed concern about a strategic industry moving offshore. Mittal seems to have accepted this, because his son Aditya said at the time the partial offer was announced that he had discussed it with both these parties.
Source: IANS