Head Office:
14 April 2008
ASX ANNOUNCEMENT
MIDWEST CORPORATION LIMITED - OAKAJEE PORT ANNOUNCEMENT
The Board of
Directors of Midwest Corporation Limited ("Midwest"
– ASX: MIS) has
recently met and now provides an update to shareholders and the market on its
participation in the new port development at Oakajee.
Yilgarn
On or about 21
September 2007 (when Sinosteel Corporation ("Sinosteel") was not a
substantial shareholder of Midwest), Yilgarn Infrastructure Limited
(“Yilgarn”) and Midwest entered into agreements
in relation to the development of the Oakajee Port
and related infrastructure. These included an Infrastructure
Implementation Agreement (in which Midwest has
certain obligations of exclusivity and non-solicitation to Yilgarn in relation
to port and rail infrastructure) and a Foundation User Term Sheet (which is currently
due to expire on 28 May 2008
and which envisages that the parties may execute a Foundation Infrastructure
User Agreement).
On 3 December 2007
the Western Australian State Government (via the Department of Planning and
Infrastructure ("DPI")) advised that it would offer each of Midwest and Murchison Metals Limited ("Murchison")
the opportunity to develop the port infrastructure at Oakajee through a
contestable process and conferred on the two companies the right to nominate an
infrastructure provider of choice. On 28 February 2008 the DPI issued to each of
Midwest and Murchison a Request for Proposal for Development of a Deep Water
Port at Oakajee
("RFP") which the companies (or their nominated infrastructure
providers) must respond to by 9
May 2008. Murchison has nominated an organisation called Oakajee Port and Rail as its infrastructure
provider.
Yilgarn has
requested Midwest to nominate Yilgarn as Midwest's
infrastructure provider so that it can respond to the RFP. Yilgarn has
also requested that Midwest affirm its status
as a foundation user and to extend the date by which the Foundation
Infrastructure User Agreement has to be executed so that these dates fall into
line with the RFP timetable. Midwest is under no
obligation to do either of these.
The nomination
sought by Yilgarn would give it the right to respond to the RFP which is to
design, construct, own, operate, maintain and finance various elements of the Oakajee Port. The port, and
supporting rail infrastructure, is critical for the development of Midwest's
assets including the Weld Range, Jack Hills and Robinson
Range projects.
Sinosteel Becomes a Substantial
Shareholder of Midwest
Sinosteel
Corporation became a substantial shareholder of Midwest
on 24 January 2008.
Murchison remains
as a 4.77% shareholder of Midwest following
its unsuccessful takeover bid.
Yilgarn, together
with Sinosteel and others, are promoting or propose to promote Yilgarn as the
infrastructure provider for the mid west region. Midwest
is of the view that this makes Yilgarn and Sinosteel associates for the
purposes of Chapter 10 of the ASX
Listing Rules. As required under Chapter 10, the nomination of Yilgarn
and/or the entering into the Foundation Infrastructure User
Agreement with Yilgarn, therefore requires Midwest shareholder approval if the aggregate
value of these transactions exceed 5% of Midwest's net asset value
(approximately $7,000,000). The Directors of Midwest are concerned that
this aggregate value of these two transactions is greater than the $7,000,000
Chapter 10 Listing Rule threshold. Midwest
has and will continue to consult ASX
on this matter.
Sinosteel, under
cover of letters from its lawyers, has advised Midwest
that it supports the nomination of Yilgarn under the RFP.
Yilgarn Arrangements
The Directors of
Midwest are of the opinion that the most appropriate course of action, given
the above circumstances, is for Midwest's nomination of Yilgarn and/or the
entering into of a Foundation Infrastructure User
Agreement with Yilgarn be subject to Midwest
shareholder approval in accordance with Chapter 10. Furthermore, given
that Midwest is currently the subject of a hostile takeover offer by Sinosteel the
Director’s of Midwest intend to obtain shareholder
approval as a matter of good corporate governance.
Midwest is of the
opinion that it can effectively nominate Yilgarn and agree all related matters
subject to Midwest shareholder approval.
This would be done in part by Midwest nominating a wholly owned subsidiary of Midwest which responds to the RFP with assistance from
Yilgarn. Assuming Midwest shareholder
approval is obtained Yilgarn could acquire 100% of this subsidiary.
Midwest intends to discuss this and other
matters with the DPI this week. Midwest is confident that the DPI will
understand that this process has been forced on Midwest by Sinosteel's
shareholding in Midwest and will respect that
it has to comply with the ASX
Listing Rules.
Midwest and Yilgarn have been in
negotiations for sometime with a view to agreeing the nomination of Yilgarn
under the RFP process. Midwest wants to continue the negotiations on the
nomination and related matters all of which will now have to be subject to Midwest shareholder approval.
Midwest will appoint
an independent expert to prepare a report on the possible transactions with
Yilgarn that would be included in the notice convening a general meeting of Midwest shareholders. Such an expert must state
whether the transactions are fair and reasonable to Midwest
shareholders other than Sinosteel and its associates. The expert will
also be asked to estimate the aggregate value of these transactions.
Yilgarn has by open
letter to Midwest and the Midwest Directors dated 11 April 2008 alleged that Midwest is in breach
of the Infrastructure Implementation Agreement and has reserved all
of its rights in respect of the alleged breaches and as a shareholder of Midwest. Midwest
denies that it is in breach of the Infrastructure Implementation Agreement.
In the same open letter
Yilgarn has threatened that in the event that Midwest persists in its refusal
to nominate Yilgarn under the RFP process that it may initiate proceedings
against Midwest and/or the Directors of
Midwest. There is no merit in Yilgarn's allegations. Midwest
will write to Yilgarn confirming its intention to continue to negotiate with a
view to nominating Yilgarn under the RFP process.
-ENDS-
For further
information contact:
|
Martin
Debelle
Cannings
Ph: + 61 2
9252 0622
Mob: + 61
409 911 189
|
Warrick
Hazeldine
Purple Communications
Ph: + 61 8
9485 1254
Mob: + 61 417 944 616
|
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