http://www.perthnow.com.au/business/oakajee-sale-in-shareholders-...

http://www.perthnow.com.au/business/oakajee-sale-in-shareholders-best-interest-independent-expert-report/story-e6frg2r3-1226235734154

AN independent expert report recommends Murchison Metals shareholders approve a $325 million plan to sell its major assets to Japan?s Mitsubishi Corp, highlighting the risk of a corporate collapse if the deal is rejected.

The KPMG report, released today, said Murchison would be in an "extremely vulnerable position, both operationally and financially" if the sale was not approved at a February 13 meeting.

KPMG valued Murchison’s assets – a 50 per cent stake in Crossland Resources’ Jack Hills iron ore project, and half of the intellectual property associated with the Oakajee Port and Rail project – at $264.1- $423.1 million, saying Mitsubishi’s proposed $325 million buyout is “in the best interests of shareholders”.

But majority of the value of the company is in the Jack Hills project, according to KPMG’s modelling, with only $93.3-$113.1 million being assigned to the work OPR has conducted over the last few years.

The KMPG report was released today, along with Murchison’s notice of meeting to approve the sale.

The report said that, while Murchison is still free to seek other bidders for the project, the company is unlikely to find a superior offer ahead of an April 12 deadline for the repayment of around $US50 million in debt to Resource Capital Funds, Murchison’s current drawdown on a working capital fund RCF extended the company last year.

If the deal can’t be closed, however, KPMG said the most likely outcome for Murchison will be insolvency and a fire-sale of its assets, unless it can win new debt funding to keep looking for a potential bidder for its assets.

Key conditions of the deal have already been satisfied, after the Foreign Investment Review Board ticked off on the agreement shortly before Christmas, but the sale is still contingent on the State Government allowing the key contracts for the project, including an unfinished State Agreement Act, being assigned to Mitsubishi by March.

Murchison announced the sale deal in November, only a few months after admitting it could not meet its share of the $9.4 billion in capital costs for the OPR project and stage 2 of the Jack Hills mine.






This simply means Mitsubishi deal is pretty much a done deal and CHM will have comfy $25 mil in its coffer. MMX shareholder won't be willing to let this deal fall apart and see company go belly up when they can approve the deal and make it in a good position to survive.