7 July 2008
TAKEOVER AND MERGER UPDATE &
ADVICE
The Directors of Midwest Corporation Limited (ASX:MIS) (Midwest)
note the announcement today by Murchison Metals Limited (Murchison)
(ASX:MMX) regarding the withdrawal of its merger proposal with Midwest.
Midwest continues to believe that in the medium to long term,
the potential additional value created by a merger with Murchison would be
substantial and the strategic logic of the merger remains compelling. However
the re-rating of the Midwest stock has not occurred as anticipated and some
substantial Midwest shareholders, particularly
Sinosteel Corporation, Sinosteel Ocean Capital Pty Ltd and associated companies
(Sinosteel), have not embraced the merger proposal on the terms proposed
by Murchison.
Midwest looks forward to an ongoing relationship with Murchison both as
a significant investor on the Midwest share register and as the owner of
adjacent mining interests in the Mid West region of Western
Australia.
Midwest also notes that Sinosteel has now moved to 45.58% ownership of Midwest
shares, and that its unconditional cash offer of $6.38 per share remains open
until 5.00pm (WST) on 18th July 2008. Further, Murchison has today announced
that it does not intend to accept Sinosteel's cash offer in respect of
Murchison's 10% holding in Midwest, which makes it unlikely that Sinosteel will
reach ownership of 90% of Midwest shares, and will therefore be unlikely to be
able to compulsorily acquire Midwest shares
which are not accepted into Sinosteel's offer.
With the withdrawal of the Murchison merger proposal, Midwest?s
Directors make the following recommendations to its shareholders:
- If you are a Midwest
shareholder with a shorter-term investment horizon who may prefer the
certainty of cash or are otherwise considering selling your Midwest shares
during the Sinosteel offer period, you should consider either selling your
shares on market at prices above Sinosteel's Offer price of $6.38 if such
a price is available, or, if the market price is $6.38 or below, accepting
Sinosteel's takeover offer;
- If you are a Midwest
shareholder with a longer term investment horizon, then you may want to
participate in Midwest's future as a stand-alone company and retain your Midwest
shares.
In respect of the second option above, shareholders should consider that
their investment will be in a company with a controlling party owning near or
over 50% of shares on issue. In such circumstances, it may be that liquidity in
the Company?s shares will greatly diminish. Shareholders should consider this
when making their decision.
Shareholders should again note that the Company enjoys a very good
relationship with Sinosteel under its current Weld Range Joint Venture
arrangements and that Sinosteel?s breadth of experience, professional contacts
and reach into the Chinese steel marketplace are very substantial. With
Sinosteel as a major shareholder and partner, the Company has a strong
expectation of continued and focused development of all of its Mid West assets.
The Midwest Directors are now actively considering the disposal of the Midwest
shares that they own or control to Sinosteel under the terms of the Sinosteel
takeover offer. At this point, 3 Directors, Messrs Jesse Taylor, Francis Ng and
Steven Chong, with shares and options representing 2.52%, plan to dispose of
their holdings to Sinosteel during the offer period. It should be noted that
this decision is made by each Director in his capacity as a Midwest
shareholder, and with a view to his own personal financial circumstances. The 3
remaining Directors, Dato David Law, Datuk Roger Tan, and Mr. Stephen de Belle
who together hold or control approximately 14.68% of Midwest shares, have not
yet reached a final view on their Midwest shares.
Midwest will update shareholders as and when further
substantive information becomes available.
- End -
For further information, please contact:
Martin Debelle
Warrick Hazeldine
Citadel
Purple Communications
Phone: + 61 2 9290 3023
Phone: + 61 8 9485 1254
Mobile: + 61 409 911 189
Mobile: + 61 417
944 616
Issued by
Purple Communications
Level 3, 28
Kings Park Road, WEST PERTH
WA 6005
Ph: 08 9485
1254 Fax: 08 6263 0455
purple@purplecom.com.au