Minmetals confirms deal

Press, 12 June 1989, Page 29

Minmetals confirms deal

PA Auckland Minmetals’ chief representative in New Zealand, Mr Jun Chen, says he talked to his superiors in Peking about the purchase of New Zealand Steel. It was the second contact made within 24 hours, he said, and the deal still had the full support of the Chinese Government. Minmetals, an agency of the Chinese Government, is

due to pay $4OO million for NZ Steel on June 30. Mr Chen also dismissed comments from unnamed bankers in Hong Kong that the deal could lapse for want of financial backing because of the political trouble in China.

He said Minmetals did not arrange any funding from Hong Kong for the purchase. Minmetals did not have a financial adviser in Hong Kong for this acquisition.

Hong Kong bankers said Minmetals had sought backers for a SUS4SOM bridging loan, which led New Zealand observers to speculate the total purchase price for NZ Steel could be close to S7OOM.

Closer analysis, however, suggested the purchase price for NZ Steel’s share capital was likely to be closer to S4OOM, including preference shares acquired by Equiticorp and Fisher and Paykel in return for a cash injection.

Equiticorp has agreed to sell its 80 per cent NZ Steel stake to Minmetals, and Fisher and Paykel’s 20 per cent stake will go the same way.

Extra funding sought by Minmetals was thought to be for continuing the steel mill's expansion to full production.

Mr John Spencer, acting managing director at NZ Steel, said he had been assured by Minmetals that the deal was going ahead.

His company was in regular contact with the Chinese purchasers, he said, and the situation had not changed since Minmetals first announced its intentions.