MOSCOW - OM Holdings (OMH), the
Singapore-based manganese miner and metals
refiner, has abandoned a four-month effort to
place shares on the Hong Kong Stock Exchange. The
announcement came in a company release on Tuesday
to the Australian Stock Exchange (ASX), where OMH
shares are already listed.
The company
said: "In light of the unfavorable market
conditions, global market volatilities, the
current state of the manganese market and the
Company's recent share price performance, the
Board has now formed a view that the proposed dual
listing is not currently in the best interests of
the Company and has decided to discontinue with
its plans to pursue a dual listing on the HKSE."
The manganese price has been under
pressure from falling global
steel prices, but it is
currently holding firm at US$3,400 per tonne, down
just 2% from this year's peak of $3,475 per tonne
in February, and well above the $3,200 per tonne
level when the year started. So that appears
unlikely to be the reason OMH has abandoned its
initial public offering (IPO).
Sources in
Hong Kong have told Asia Times Online that it was
shareholder resistance to the planned sale of 345
million new shares, 69% of the current share
issue, diluting the minorities, that triggered a
share price collapse over the past few weeks,
accompanied by investigations by Australian and
Hong Kong regulators. The shares tumbled by more
than a third of their value from a recent high of
A$1.39 on March 30 to as low as A$0.895 on July 4
before recovering to A$1.02 on Tuesday.
Sources in Melbourne and Hong Kong claim
that investigators continue to probe shareholding
evidence that at least 50% of the OMH shares are
held through nominees and trust arrangements by
interests based in China. Non-disclosure of these
control interests was one of the hurdles for
getting approval of the initial public offering
(IPO) by the Hong Kong Stock Exchange.
In
Canberra, investigations are reportedly focusing
on whether the attempted IPO constituted an
attempt to transfer the Australian mining assets
to a foreign group without authorization under
Australia's Foreign Asset and Takeovers Act and by
the Canberra-based Foreign Investment Review
Board.
According to one source, a former
senior Hong Kong government official is one of the
individuals who is believed to have been involved
in establishing control of OMH, and who has been
the focus of the investigations of the OMH
shareholding structure.
In Singapore on
April 20, Australian and Singaporean shareholders
voted strongly against the OMH listing proposal at
the company's annual general meeting. Despite
that, OMH chief executive Peter Toth announced on
May 5 that OMH would continue with its IPO in Hong
Kong.
OMH said that despite the
thumbs-down from the minority shareholders, "the
Company, having now received advice from its legal
advisers, is of the view that although Resolution
10 was not passed, that may not impede the
Company's application process to dual list in Hong
Kong."
The Consolidated Minerals (Consmin)
group, owned by Gennady Bogolyubov, holds an 11.7%
stake in OMH. In May, he applied to the Federal
Court of Australia for a ruling to block the
listing attempt, alleging lack of proper
disclosure and violations of Australian law. The
court in Sydney has yet to rule.
In the
meantime, sources in Hong Kong say the listing
committee of the exchange, as well as the
underwriting managers, Janet Yee of CITIC and Yi
Bao of Morgan Stanley, developed cold feet. None
would comment on the reasons for the failure of
OMH's listing plan.
Tuesday's announcement
by OMH says the company is now considering "a
number of strategic alternatives". One of these is
described as "the potential de-merger of the
Company’s smelting and marketing/trading
businesses from the Company’s existing mining
operations."
The Singaporean and
Australian minorities who opposed the Hong Kong
IPO have already reacted negatively, with sources
claiming this is "a new way of removing asset
value from the listed company in Australia to
offshore companies, principally China-based
businesses".
OMH operates trading
companies in Singapore, in China at Tianjin,
Shanghai and elsewhere, and a ferromanganese
refinery also in China. Shareholder criticism of
the OMH management has queried in the past why the
company, which sells almost all of its
Australian-mined manganese to China, requires a
network of separate offshore trading companies.
Speaking on Tuesday for the Consmin group,
Oleg Sheiko told Asia Times Online: "We will have
to consider this [Tuesday's OMH announcement] to
make sure it is not another scheme for destroying
shareholder value." Asked if Consmin is seeking a
meeting with OMH and its shareholders, he declined
to reply.
John Helmer has been a
Moscow-based correspondent since 1989,
specializing in the coverage of Russian
business.
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