Wmc Debt Plan `sales Point'
The Age
Wednesday November 20, 2002
The successful completion of a $US1.1 billion ($A1.95 billion) debt refinancing by WMC was being promoted yesterday as another selling point in the group's planned $9 billion demerger, due to go to a shareholders' vote on November 29.
Although WMC stopped short of saying so, the banks in the syndicate that arranged the refinancing were more than happy to claim the quick uptake and oversubscription augured well for WMC Resources.
WMC Resources is the financially weaker of the two separately listed companies to be created by the demerger.
The other company is Alumina Ltd, which is taking on $600 million in debt associated with the nickel, copper/gold and fertiliser assets to be held by its sibling after the demerger.
The joint lead arrangers for the refinancing said it was oversubscribed and so well received they had decided to cancel the general syndication.
In what would have been music to the ears of WMC chief Hugh Morgan, Commonwealth Bank's head of global loan products, George Confos, said the universal appeal of the offering stemmed from the fact that the transaction represented a rare opportunity for banks to gain exposure to the quality asset base of WMC Resources.
Deutsche Bank director Peter Field said the success reflected the underlying strength of the WMC Resources credit profile and the high regard in which it is held in the banking arena.
Despite those endorsements, Mr Morgan has had to launch a hard-sell campaign on the demerger to counter criticism from mining analysts that it would destroy value for shareholders.
In a recently released scheme booklet for the demerger, Mr Morgan buttered up shareholders with forecasts of strongly rising profits for the demerged WMC Resources and Alumina.
Mr Morgan also confirmed that the whole process was a bonanza for the financial, legal and accounting advisers, who would pocket $32.6 million in fees. Other fees - stamp duty and refinancing - would account for $94.2 million.
``It puts us back in charge of our destiny," Mr Morgan said of the demerger plan - the response to the unsolicited and low-ball bid for the group last year from its 40-year partner in the AWAC alumina business, Alcoa of the United States.
``Fundamentally, we just cannot stay as we are, the risk being Alcoa returning at a time of its choosing. Alcoa has clearly demonstrated their interest and they will be back," Mr Morgan said.
© 2002 The Age
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