Metallgesellschaft sells control block of Metall

The parent of Metall Mining (TSE) has sold its 50.1% interest in Metall.

Metallgesellschaft AG of Germany sold its holdings for proceeds of about $458 million (40.7 million shares at $11.25 per share) to an underwriting group led by Burns Fry, Gordon Capital and RBC Dominion Securities. The issue was well received; the shares were reported to have been sold even before the Aug. 30 public announcement. Metall shares closed that day at $12.25, up 75 cents.

The sale was expected in light of the parent’s financial woes reported last year. Lower metals prices and significant losses from the trading of oil futures contracts contributed to a company restructuring.

The shares were offered for sale in Canada and Europe, and on a private placement basis in the U.S.

In connection with this sale, Metall and its parent reached agreement with respect to Metall’s 35% interest in Norddeutsche Affinerie AG. For several months, Metall and its parent pursued a number of initiatives to deal with Metall’s interest in three of its principal assets: Norddeutsche Affinerie, which owns and operates a copper smelter in Hamburg, Germany; Temagami Mining, through which Metall and Keevil Holding (controlled by the Keevil family) hold a controlling interest in Teck (TSE); and, Ok Tedi Mining, which owns and operates the Ok Tedi gold-copper mine in Papua New Guinea.

Under contractual arrangements affecting Metall’s interests in Norddeutsche Affinerie, Temagami and Ok Tedi, Metall was required to retransfer its interest in those assets to Metallgesellschaft if Metallgesellschaft ceased to control Metall.

In the case of Norddeutsche Affinerie, Metall and Metallgesellschaft have agreed to the terms on which Metallgesellschaft will acquire Metall’s interest in Norddeutsche Affinerie in order to satisfy the retransfer requirement.

Metall had previously reached agreement with Keevil Holding, and also with BHP and the government of Papua New Guinea (its co-investors in Ok Tedi), to alternative arrangements under which the retransfer requirement will not apply to Temagami and Ok Tedi, respectively, should Metallgesellschaft cease to control Metall.

Metall also says management is considering the adoption of a shareholder rights plan, or “poison pill,” designed to ward off a hostile takeover bid. Metall is an integrated mining company engaged in exploration, development, mining and processing of base and precious metals internationally. Metall’s primary product is copper, but it also produces other metals such as zinc, gold, silver and lead.