Australia has ruled that United States hedge fund Harbinger Capital Partners' share acquisition in Midwest Corp ran foul of the nation's foreign investment law, as alleged by China's Sinosteel Corp.
This helps defend Sino-steel's position in the battle with Murchison Metals Ltd for control of Midwest, an iron ore prospector. Murchison, 19.98 percent owned by Harbinger, holds 9.98 percent in Midwest.
The combined stake in Midwest that Harbinger held with Murchison should be capped at 15 percent before a government approval was given under the Foreign Acquisitions and Takeovers Act, Sinosteel argued.
Australia's Takeovers Panel said yesterday it found Harbinger last month bought 9.29 percent in Midwest, including 4.27 percent that was above the 15 percent threshold bought without giving a notice. "The Harbinger entities' non-compliance gave them an advantage during the Sinosteel takeover bid which they would not otherwise have had," it said.
Sinosteel, which has built up 43.62 percent in Midwest, welcomed the decision.
"We are pleased that our position on this matter has been vindicated and that all shareholders can make a clear and informed decision on the merits of the Sinosteel offer for Midwest," President Huang Tianwen said.
Sinosteel said it remained opposed to the terms of a proposed merger between Midwest and Murchison. Murchison's all-stock offer is valued at about A$7.17 (US$6.82) a share, versus Sinosteel's unconditional A$6.38 cash offer. Midwest, which had jumping above A$7 late May, rose 0.31 percent to A$6.51 yesterday. Sinosteel said Harbinger's non-compliance inflated Midwest shares.
(Shanghai Daily June 23, 2008)
