Funding for Noranda takeover ready by yr-end -report
Thu Oct 21, 2004 11:20 PM ET
SINGAPORE, Oct 22 (Reuters) - Financing for a planned $5 billion takeover of Canadian mining giant Noranda Inc. (NRD.TO: Quote, Profile, Research) (NRD.N: Quote, Profile, Research) by China Minmetals Corp. is expected to be in place as early as the end of this year, debt market newsletter BasisPoint reported.
State-owned policy lender China Development Bank and domestic and foreign commercial banks were expected to fund the purchase, which would be China's largest takeover of a foreign company, the newsletter quoted unidentified sources as saying.
A financing deal was expected to be signed by early November before Noranda sought approval from shareholders and Investment Canada, a government agency that reviews foreign investment in Canada, it added.
Noranda Inc., the world's number three zinc and ninth-largest copper producer, and state-run China Minmetals are in exclusive talks on the mostly cash takeover. The acquisition talks are expected to be finalised around the end of this month.
China Development Bank "is expected to provide funding for part of the acquisition cost and has sent an RFP (request for proposal) to commercial banks to bid on terms such as size and structure for the remainder," BasisPoint reported in its Oct. 21 edition.
Citigroup (C.N: Quote, Profile, Research) , which is advising Minmetals on the takeover, and HSBC (HSBA.L: Quote, Profile, Research) (0005.HK: Quote, Profile, Research) are among foreign banks that have already submitted sole bids, it said.
State-owned Bank of China was among major domestic banks negotiating with Minmetals, it said.
A Citigroup executive told Reuters in an interview last month that Minmetals had put in place the financing for the planned deal, which was driven by China's insatiable hunger for raw materials.
Gordon Paterson, head of Asia Pacific investment banking for Citigroup, said funding would come from internal resources at Minmetals, as well as loans from domestic and foreign banks.
BasisPoint quoted sources as saying that possible funding structures could include a corporate loan with Minmetals providing a guarantee; a loan supported by China Development Bank; or a project financing based on the project's cash flow.
� Reuters 2004. All Rights Reserved.
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Companies mentioned in this article
Data as of 22 Oct 2004 11:26 ET. Delayed at least 15 to 20 minutes.
Symb Company Last Chg Chg %
0005.HK HSBC HOLDINGS 125.50 0.00 0.00
C.N CITIGROUP 42.90 -0.05 -0.12%
HSBA.L HSBC HOLDINGS 885.00 -0.00 -0.00
NRD.N NORANDA INC 17.07 +0.42 +2.52%
NRD.TO NORANDA INC 21.16 +0.39 +1.88%
NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq and all other quotes delayed by at least 15 minutes.
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http://www.canada.com/national/nationalpost/financialpost/story.html?id=c1b133a9-1cdc-41cb-8d0f-e8f23286b801&page=2
Noranda defends China sale
'If China is going to put out multi-billions, it will have a huge investment to protect'
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Drew Hasselback and Paul Vieira
Financial Post
Thursday, October 07, 2004
TORONTO and OTTAWA - Senior executives from Noranda Inc. are adamantly defending controversial talks to sell the company to China's communist government, despite suggestions from MPs that Parliament may block the proposed sale.
Opposition and government MPs have complained the sale would grant China cheap access to Canadian minerals and put Canadian workers in the hands of a Chinese company that has been accused of labour abuses.
Derek Pannell, chief executive of Noranda, flatly denied those accusations yesterday.
"China Minmetals wants to do all the right things in terms of environment, health and safety. I honestly believe that is what they intend to do," Mr. Pannell said.
He and Aaron Regent, chief executive of Falconbridge Ltd., mounted the spirited defence in an interview with the Financial Post yesterday.
They insisted China Minmetals Corp. would do nothing to harm Canadian employees or operations.
"If China is going to put out multi-billions of dollars to acquire Noranda, they'll have a huge investment to protect," Mr. Regent said.
"They're going to have to make sure that they treat employees fairly, otherwise they won't be able to retain people. If they don't retain people, they're potentially going to put the investment at risk."
Mr. Pannell denied suggestions the takeover is a back-door attempt by the Chinese government to secure cheap access to Canadian minerals.
He said China Minmetals is clearly in business to make money, and that means selling mineral production at full market prices.
"I don't know if you've ever been to China, but I would say that it has more of a market economy than Canada does," Mr. Pannell said.
Noranda, Canada's oldest and largest mining company, has begun exclusive talks to sell itself for more than $7-billion to China Minmetals, a holding company owned by the Chinese government. China Minmetals would also acquire Noranda's 60% control stake in Canada's third-largest miner, Falconbridge.
Federal politicians have raised concerns about the Chinese Minmetals proposal in Parliament. Conservative foreign affairs critic Stockwell Day and Liberal MP David Kilgour have talked about blocking the sale to protect Canadian interests.
The Chinese company's human rights record has come under fire, too. A Chinese dissident accused the company of abuses during U.S. congressional hearings in 1997.
David Emerson, the Minister of Industry, yesterday admitted the federal government would consider China's human rights record in any regulatory review of a proposed sale.
"Clearly, we're all concerned about human rights issues, but we have to be concerned about long-term economic consequences," Mr. Emerson said.
"It's fair to say that I believe -- and I think this government believes -- that trade and investment relationships with China are very, very important going forward. And that will factor in the decision making."
Mr. Regent and Mr. Pannell expressed some disappointment the political criticism has centred on the rights issue, and ignored the economic opportunity.
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China's resource bid
Friday, October 22, 2004, Page A18
Chinese Foreign Minister Li Zhao-xing could use a few lessons in diplomacy, but there is nothing wrong with his understanding of economics. He told The Globe and Mail that the planned $7-billion takeover of Noranda by a consortium of Chinese state-controlled companies is just a small part of a strategy to invest heavily in this country's resource sector. This should be no surprise, given China's rapid economic transformation and its unquenchable appetite for raw materials to feed its vast industrial and consumer needs.
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