MEDIA RELEASE
11 October 2007
Midwest shareholders advised to Take No Action
until Murchison’s Offer is evaluated
On 10 October 2007 Murchison Metal Limited announced its
intention to make an unconditional takeover offer to acquire all of the shares
in Midwest Corporation Limited. Murchison's announcement included an open
letter and Briefing Paper to Midwest
shareholders.
Murchison's takeover offer is
unsolicited and purports to be unconditional. Until Murchison lodges a
Bidder's Statement (which Murchison currently anticipates will be done by the
end of next week) Midwest is not in a position
to fully and comprehensively assess the merits of the takeover offer.
The Board is
unanimous in advising Midwest shareholders to take
no action until the Board has had an opportunity to consider the Bidder's
Statement and make a recommendation.
Midwest will not
respond in detail to Murchison's takeover offer until it has received and had
ample opportunity to consider the Bidder's Statement.
The Board is currently appointing
advisors to assist with evaluating the Bidder's Statement when it is received,
formulating a recommendation to Midwest’s
shareholders and responding to Murchison's takeover offer. In particular
the Board will seek advice on the value of Murchison's scrip as it is
fundamental to the value of Murchison's takeover offer.
The Board’s initial view is
that the evaluation will need to consider the comparative value of resources
and resource potential.
For the purpose of clarity for Midwest’s shareholders, the Board would like to
clarify the following points made by Murchison in correspondence to
shareholders:
Sinosteel/Midwest
Joint Venture
1.
Sinosteel does not have an immediate
or any unconditional right to acquire a 50% interest in the projects the
subject of the Sinosteel Midwest Studies Joint Venture Agreement
(“Sinosteel JVA”).
2.
In respect of each project under the
Sinosteel JVA, Sinosteel will acquire an interest (which Midwest may transfer
to Sinosteel depending on the terms of an operating joint venture agreement
agreed for that project) only if:
(a)
Sinosteel and Midwest
each approve the pre-feasibility (which will include an agreement on the
intrinsic value of the project) and bankable feasibility studies for that
project; and
(b)
Sinosteel and Midwest
agree the terms of an operating joint venture agreement for that project.
3.
If a project does not progress to an
operating joint venture Sinosteel and Midwest
are each able to terminate the Sinosteel JVA. If terminated, Midwest retains the mining tenements and there are rights
of first refusal in relation to future project work.
4.
In certain circumstances Midwest has to reimburse Sinosteel the money it has
contributed under the Sinosteel JVA. If Midwest subsequently decides to
proceed with the project or sell or transfer the mining tenements in respect of
the project Sinosteel is entitled to be refunded certain monies but not exceeding
the aggregate of Sinosteel’s contributions.
5.
Sinosteel and Midwest
each have an unfettered discretion whether or not to approve the
pre-feasibility, bankable feasibility studies and intrinsic value, and
therefore whether the Sinosteel JVA can continue.
6.
There are no change of control
provisions in the Sinosteel JVA.
Taxation
7.
It is highly unlikely that any
Qualified Tax Advisor, as referred to in the Murchison takeover offer, will be
able to make the Tax Confirmation (which is a condition precedent to the Higher
Price under Murchison's takeover) before the end of the offer period because
Sinosteel and Midwest will not have agreed the terms of an operating joint
venture agreement for any project.
These discussions
can only occur after the feasibility studies have been completed under the
Sinosteel JVA. At that time, when assessing an operating joint venture Midwest
will take tax appropriate advice to address any tax issues arising.
Yilgarn
Infrastructure
8.
Midwest has entered into binding exclusive
arrangements with Yilgarn Infrastructure Limited in relation to being a
foundation user and to assist Yilgarn to progress development of the new rail
and port infrastructure as quickly as possible. These arrangements do not
include every element of a final usage agreement but do include a commitment to
agree these terms on or before Yilgarn’s financial
close.
Bryan Oliver
Chief Executive Officer
Media Contact:
Cannings:
(02) 9252 0622
Martin
Debelle 0409 911 189
Purple
Communications: (08) 9485 1254
Warrick Hazeldine 0417 944
616
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