CUDECO INVESTOR PUSHES TO HALT $88M RIGHTS ISSUE

Written on the 26 October 2015 by Nick Nichols

CUDECO INVESTOR PUSHES TO HALT $88M RIGHTS ISSUE

A CUDECO (ASX:CDU) shareholder has called on the Takeovers Panel to prevent major Chinese shareholders gaining a bigger foothold on the Gold Coast-based copper miner.

However, the move could undermine the financial viability of the company which has been struggling to bring its Rocklands copper mine in north-west Queensland to full production.

Neville Lowe, who has been a vocal opponent of the shorting of CuDeco stock in recent years, has written to the Takeovers Panel expressing concern over a proposed $88.3 million rights issue.

Lowe says the issue will present 'unacceptable circumstances' that will benefit major shareholders Sinosteel Equipment and Engineering, New Apex Asia Investment and China Oceanwide International Investment Co the trio that sought the removal of company founder Wayne McCrae as chairman in July.

He also has accused right issue co-underwriter Infinitus of not lodging a substantial holding notice in relation to CuDeco.

The substantial holder notice is required when a shareholder has control of more than 5 per cent of a company. Some sources suggest that Infinitus is linked to parties associated with a $20 million share and option issue in 2013, although this has yet to be proven.

Lowe has sought interim orders from the Takeovers Panel that the major Chinese shareholders not acquire any shares in CuDeco.

He also calls for the rights issue to be scrapped, or at the very least that the rights issue should only proceed if it mitigates any control effect on the company by these shareholders.

Smaller shareholders are concerned that without the rights issue, CuDeco would not have the funds it needs to bring its Rocklands copper mine to full production and that the company could fall into administration.

Sinosteel, New Apex and China Oceanwide have provided short-term funding to the company until the rights issue is finalised.

Sinosteel, a China state-owned entity, has accepted responsibility for the entire electrical installation for the $300 million mineral processing plant at Rocklands and has committed to the job in exchange for more shares in CuDeco.

Sinosteel currently has a 6.23 per cent stake in CuDeco and, between them, the three Chinese shareholders currently control 34.85 per cent of the company.

The three joined forces to provide further funding for CuDeco last year, culminating in the right issue announced in September.

Sinosteel, New Apex and China Oceanwide announced they were prepared to take up their full entitlements to the rights issue, and their new holding in the company will depend on the take-up by smaller shareholders.

The prospectus for the rights issue, which offers one new share for every two held at an issue price of 60c per share, has yet to be lodged by the company.

CuDeco has already said it would refer the matter to the Takeovers Panel in regard to the potential effect the new share issue will have on control of the company.

Earlier this month, CuDeco alluded to the Takeovers Panel application by Lowe and that this could delay the timing of the rights issue.


Author: Nick Nichols

Latest News

OROTON GOES CLICKS AND BRICKS AS PROFITS SLIDE

TWO former Aussie lawyers have turned their passion for fashion into a $15 million dollar international business six ...

MANTRA'S SHARE PRICE SURGE INDICATES 'SUITORS ARE CIRCLING' THE HOTEL GROUP

THE rumour mill surrounding a high-level takeover of Mantra Group (ASX: MTR) is in full production with its shares su...

MELBOURNE CBD GEMS SELL FOR $17 MILLION, MARKING A NEW PROPERTY HOTSPOT

LITTLE Lonsdale Street in the heart of Melbourne's CBD has become a favourite for investors in 2017, following th...

CAN GOOGLE RECOVER FROM GLOBAL CONTROVERSY OVER ITS PROGRAMMATIC ADVERTISING SYSTEM?

IT'S the story that has rocked the world of advertising. The lucrative Google (NASDAQ: GOOGL) advertising system ...

Related News

RAY OF HOPE FOR SLATER AND GORDON AS LENDERS STEP IN

EMBATTLED law firm Slater and Gordon (ASX: SGH) has announced to the ASX that it has launched confidential discussion...

SPROUTX PROVIDES THE SEED FOR AGTECH STARTUPS

AGTECH innovation fund SproutX has opened applications for its first accelerator round, backed by $10 million from...

GAS PRICES MAY FORCE BRICKWORKS TO TAKE MANUFACTURING OVERSEAS

BRICKWORKS Limited (ASX:BKW) chairman Robert Millner says soaring energy prices may force the company to turn to offs...

CHINA CONTINUES TO COLLECT AUSSIE PROPERTY ASSETS

CHINESE coin continues to dominate Australia's offshore real estate investment market, accounting for almost h...

EVENTS COMING UP

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter