Offer for QCT Resources-Pt 1
Broken Hill Proprietary Co Ld
29 August 2000
PART 1
Date 28 August 2000
BHP AND MITSUBISHI ANNOUNCE CASH BID FOR QCT RESOURCES
The Broken Hill Proprietary Company Limited (BHP) and Mitsubishi Development
Pty. Ltd. (Mitsubishi) today announced a joint cash offer of A$1.20 per share
for all of the ordinary shares in QCT Resources Limited (QCT). The offer by the
50/50-owned bidding vehicle, MetCoal Holdings (Qld) Pty Ltd, values QCT's equity
at A$830 million.
QCT holds a non-operating 32.37% interest in the Central Queensland Coal
Associates (CQCA) and Gregory joint ventures and 100% of the South Blackwater
coal mining operation in Queensland's Bowen Basin. BHP and Mitsubishi own the
remaining interests in these joint ventures. BHP manages the CQCA and Gregory
joint ventures and markets all products.
Commenting on the offer, BHP Managing Director and CEO, Paul Anderson, and
Mitsubishi Managing Director, Kenjiro Itadani, said:
'BHP and Mitsubishi have agreed to form a strategic alliance designed to ensure
the future competitiveness of their Bowen Basin metallurgical coal assets. This
offer for QCT is the first step, as partners, in furthering this alliance.
'QCT's major shareholder, Santos, has announced that its 36.4% shareholding in
QCT is now considered non-core to the company's future, making this an
appropriate time for BHP and Mitsubishi to address the ownership of these Bowen
Basin assets. As existing joint venture partners, BHP and Mitsubishi are the
natural buyers of QCT.
'Our offer fully values this opportunity for BHP and Mitsubishi. QCT is an
investment vehicle and its key assets are the assets we already manage. We also
recognise the reported underperformance of South Blackwater mine.
'We note that QCT's share price already builds in speculation of a takeover
offer. As such, the premium of the offer price to the closing price on Friday 25
August does not truly reflect the value of our offer. Our offer price is
significantly higher than the price QCT shares were trading at before the
speculation began.'
The offer represents a premium of:
- 22% to QCT's closing share price on 25 August 2000 of A$0.98; and
- 30% to QCT's weighted average share price of A$0.92 for the preceding 3
months.
Commenting on the transaction Mr Itadani said: 'We welcome this alliance with
BHP, which seeks to utilise the complementary strengths of the two organisations
for the benefit of our joint interests in Queensland.
'In addition to this, BHP and Mitsubishi have relationships that extend beyond
the Bowen Basin and include interests in the Escondida copper mine in Chile and
the North West Shelf gas project in Australia.
'Mitsubishi was a founding partner in the CQCA joint venture in 1968 and is
fully committed to the Australian coal industry. This alliance provides the
opportunity for us to build further and improve on our portfolio of stable coal
investments.'
Mr Anderson said: 'The alliance is an extension of a long standing relationship
with Mitsubishi across a range of major businesses and is founded on an aligned
view of the future of the metallurgical coal business.
'This move is in line with our stated strategy to enhance cost competitiveness,
thereby ensuring the long-term future of our Queensland coal businesses. In
addition, it builds on our strategy of actively managing our asset portfolio and
managing risks through partnering arrangements.'
The offer conditions include regulatory approvals, the ability to proceed to
compulsory acquisition and other conditions.
BHP and Mitsubishi are being jointly advised by CIBC World Markets and ING
Barings.
The bidders statement will be dispatched to QCT shareholders in mid September.
For further information please contact:
BHP
Mandy Frostick
Manager Media Relations
Phone: 61 3 9609 4157 Mobile: 0419 546 245
Robert Porter
Vice President Investor Relations
Phone: 61 3 9609 3540 Mobile: 61 419 587 456
www.bhp.com
Mitsubishi
Robert Campese
Manager General Affairs
Phone: 61 2 9951 4838
Attachments
Summary of Conditions Profile of Mitsubishi
Summary of Intentions Current ownership structures
Profile of BHP Asset fact sheets
Offer by MetCoal Holdings (Qld) Pty Ltd (the Bidder)
a company owned equally by wholly owned subsidiaries of
The Broken Hill Proprietary Company Limited and
Mitsubishi Development Pty Ltd
Conditions
This Offer and the contract that results from acceptance of this Offer is
subject to fulfilment of the following conditions:
(a) that at the end of the Offer Period, the Bidder:
(i) has a relevant interest in at least 90% (by number) of the QCT Shares on
issue at that time; and
(ii) has acquired at least 75% (by number) of the QCT Shares that the Bidder
offered to acquire under the Bid (whether the acquisition happened under
the Bid or otherwise);
(b) that during the period commencing on the Announcement Date and ending at
the end of the Offer Period:
(i) there is not in effect any preliminary or final decision, order or
decree issued by a Public Authority;
(ii) no action or investigation is instituted or threatened by any Public
Authority with respect to any company in the QCT Group; or
(iii) no application is made to any Public Authority (other than by the
Bidder or a company in the BHP Group or the Mitsubishi Group),
in consequence of or in connection with the Offers, which restrains or
prohibits or threatens to restrain or prohibit, or otherwise adversely
impact, the making of the Offers or the completion of any transaction
contemplated by this Bidder's Statement (including implementation of
the intentions set out in the Bidder's Statement) or seeks to require
the divestiture by the Bidder of any QCT Shares, or the divestiture of
any assets of the QCT Group, the BHP Group or the Mitsubishi
Group;
(c) that before the end of the Offer Period:
(i) the European Commission has issued a decision pursuant to Article
6(1)(b) or Article 8(2) of the Council Regulation (EEC) 4064/89 (as
amended) (the 'Merger Regulation') (or has been deemed to have done
so under Article 10(6) of the Merger Regulation) declaring any
concentration with a community dimension as a result of the Offers to
be compatible with the common market;
(ii) the European Commission has issued a decision authorising the
acquisition of QCT by the Bidder pursuant to Article 66(2) of the
European Coal and Steel Community Treaty (the 'ECSC Treaty') or
exempts such acquisition from prior authorisation pursuant to decision
25-67; or
(iii) in the event that a request pursuant to Article 9(2) of the Merger
Regulation has been made by a Member State and the European
Commission has, in accordance with Article 9(3) of the Merger
Regulation, referred the whole or part of the proposed acquisition of
QCT by the Bidder to the competent authorities of one or more Member
States or having been deemed to have done so pursuant to Article 9(5),
each such authority has granted a clearance in respect of all those
parts of the proposed acquisition of QCT by the Bidder which were
referred to it, or has been deemed to have granted such a clearance;
(d) that one of the following occurs before the end of the Offer Period:
(i) the Bidder receives a notice from the Treasurer or his agent to the
effect that there is no objection to the acquisition of the QCT Shares
by the Bidder (by any means permitted by the Corporations Law) under
the Australian Government's foreign investment policy, such notice
being unconditional;
(ii) the period provided under the Act during which the Treasurer may make
an order under section 18 of the Act or an interim order under section
22 of the Act prohibiting the acquisition of QCT Shares by the Bidder
(by any means permitted by the Corporations Law) has elapsed, without
such an order being made; or
(iii) if an interim order prohibiting such acquisition is made, the
subsequent period for making a final order prohibiting the acquisition
of QCT Shares by the Bidder has elapsed, without such final order being
made;
(e) that during the Offer Period, all Approvals which are required by law or by
any Public Authority as are necessary to permit the Offers to be made to
and accepted by QCT shareholders (other than those referred to in
paragraphs (c) and (d) above) are granted, given, made or obtained on an
unconditional basis and remain in full force and effect in all respects and
do not become subject to any notice, intimation or indication of intention
to revoke, suspend, restrict, modify or not renew the same;
(f) that none of the following happens during the period commencing on the
Announcement Date and ending at the end of the Offer Period:
(i) QCT converts all or any of its shares into a larger or smaller number of
QCT Shares;
(ii) QCT resolves to reduce the number of QCT Shares on issue in any way;
(iii) QCT:
(A) enters into a buy-back agreement; or
(B) resolves to approve the terms of a buy-back agreement under section
257C(1) or 257D(1) of the Corporations Law;
(iv) QCT issues shares, or grants an option over its shares, or agrees to
make such an issue or grant such an option;
(v) a subsidiary of QCT issues shares, or grants an option over its shares,
or agrees to make such an issue or grant such an option to a person
other than QCT or a wholly owned subsidiary of QCT;
(vi) QCT issues, or agrees to issue, convertible notes;
(vii) a subsidiary of QCT issues, or agrees to issue, convertible notes to a
person other than QCT or a wholly owned subsidiary of QCT;
(viii) QCT or a subsidiary of QCT disposes, or agrees to dispose, of the whole
or a substantial part, of its business or property;
(ix) QCT or a subsidiary of QCT charges, or agrees to charge, the whole or a
substantial part of its business or property;
(x) QCT or a subsidiary of QCT resolves to be wound up;
(xi) a liquidator or provisional liquidator of QCT or a subsidiary of QCT is
appointed;
(xii) a court makes an order for the winding up of QCT or a subsidiary of QCT;
(xiii) an administrator of QCT or a subsidiary of QCT is appointed under
section 436A, 436B or 436C of the Corporations Law;
(xiv) QCT or a subsidiary of QCT executes a deed of company arrangement; or
(xv) a receiver, or a receiver and manager, is appointed in relation to the
whole, or a substantial part, of the property of QCT or a subsidiary of
QCT;
(g) that during the period commencing on the Announcement Date and ending at
the end of the Offer Period, none of the following happens or the
existence of any of the following is disclosed (without having been
disclosed prior to the Announcement Date):
(i) QCT or a controlled entity of QCT acquires, agrees to acquire or comes
under an obligation to acquire one or more assets (or an interest in
assets), companies or businesses for an amount in aggregate greater
than $50 million or individually greater than $15 million;
(ii) QCT or a controlled entity of QCT disposes, agrees to dispose or comes
under an obligation to dispose of assets (or an interest in assets) for
an amount in aggregate greater than $50 million or individually greater
than $15 million other than in the ordinary course of its business;
(iii) QCT or a controlled entity of QCT enters into, agrees to enter into or
comes under an obligation to enter into any agreement, joint venture,
farmout, tribute, alliance or partnership which is material to the
structure, business, assets, liabilities, financial or trading position
or condition, profitability or prospects of QCT and its controlled
entities taken as a whole;
(iv) proceedings are brought against QCT or a controlled entity of QCT and
the potential damages or compensation payable by QCT and its controlled
entities in those proceedings is greater than $50 million;
(v) QCT or a controlled entity of QCT enters into, agrees to enter into or
comes under an obligation to enter into any contract with a third party
which is not a wholly owned subsidiary of QCT for that party to perform
either all or substantially all of the mining operations of the South
Blackwater mine or all or substantially all of the other operations of
the South Blackwater mine;
(vi) QCT or a controlled entity of QCT enters into, agrees to enter into or
comes under an obligation to enter into any agreements or arrangements
to materially vary existing marketing, agency or sales agreements or
arrangements in relation to the disposition of coal from the South
Blackwater mine or the coal received by QCT or a controlled entity of
QCT as a participant in the CQCA Joint Venture or the Gregory Joint
Venture;
(vii) QCT or a controlled entity of QCT:
(A) gives, or indicates an intention to give, notice to terminate; or
(B) terminates,
any agreement or arrangement with any entity of the BHP Group or the
Mitsubishi Group in connection with the marketing or sale of coal
received by QCT or a controlled entity of QCT as a participant in the
CQCA Joint Venture or the Gregory Joint Venture;
(viii) a person having, as a result of the Bidder acquiring QCT Shares, any
right (whether subject to conditions or not) to terminate or vary any
agreement with QCT or a controlled entity of QCT; or
(ix) QCT or a controlled entity of QCT conducts its business and operations
otherwise than in the ordinary course; and
(h) that during the period commencing on the Announcement Date and ending at
the end of the Offer Period, there has not occurred, been announced or
otherwise become public:
(i) any material adverse change in the structure, business, assets,
liabilities, financial or trading position or condition, or
profitability or prospects of QCT and its controlled entities taken as
a whole; or
(ii) any event, action, proceeding, circumstance or change in circumstances
which is reasonably likely to result in a material adverse change of
the kind mentioned in sub-paragraph (h)(i).
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