Regent Pacific Group Ltd., a Hong Kong-based investment holding company, abandoned its A$267 million offer to buy the shares it didn’t own in BC Iron Ltd. after the ore producer’s biggest stakeholder opposed the deal.
Consolidated Minerals Ltd., which holds 21 percent of Perth-based BC Iron, “flatly opposed” Regent’s January-announced deal to buy BC Iron shares at A$3.30 apiece, Regent said in a statement to the Hong Kong stock exchange today. BC Iron is “perplexed” by Regent’s decision, it said separately.
Regent, aiming to become a mid-tier mining house producing bulk commodities, base metals and gold in the Asia-Pacific region, was seeking to add iron-ore production to its portfolio. Steel consumption is predicted to jump 5.3 percent to a record this year, according to forecasts from the World Steel Association.
BC Iron completed its first shipment of iron ore from Western Australia’s Pilbara region in January and expects to export 1 million metric tons by mid-year, it said on Jan. 11. The Perth-based company, with a market value of A$266 million, went into a trading halt before today’s announcement at $2.82 a share, down 15 percent from Regent’s offer price.
“Regent Pacific’s request is particularly unusual as Consolidated Minerals has yet to have the benefit of reviewing an independent expert’s report as to whether, in the opinion of the expert, the scheme is in the best interests of shareholders,” BC Iron said in a statement to the Australian stock exchange today.
Regent shares fell 9.3 percent to 39 Hong Kong cents by 12.52 p.m. in local trading, giving it a market value of HK$1.53 billion ($196 million).
Consolidated Minerals, owned by Ukrainian billionaire Gennadiy Bogolyubov, had indicated that it opposed Regent’s purchase of BC Iron, today’s statement from Regent said.
“The company has therefore accepted Consolidated Minerals’ publicly stated position and, as a consequence, the board is firmly of the view, formed in good faith, that Consolidated Minerals will vote against the scheme,” it said.