1. 6.1k

    Bid tops Perilya's proposal, says CBH Jamie Freed

    January 8, 2009

    THE battle over the future of Broken Hill's zinc and lead resources intensified yesterday when CBH Resources declared its hostile scrip bid for Perilya was a superior option to the target's planned $45.5 million placement to the Chinese smelter Zhongjin Lingnan.

    CBH broke four weeks of silence on the Zhongjin deal with a combative statement that emphasised Perilya's weakened financial position.

    Perilya this week said it could not last beyond March 31 without raising more funds or selling assets if the Zhongjin placement was voted down by its shareholders at a meeting on February 5.

    CBH's 4.2-for-one offer was worth 25c at yesterday's close of trading, compared with the 23c-a-share price of the placement which would hand Zhongjin control of 50.1 per cent of Perilya. CBH and Perilya have both been bleeding cash in recent months due to low zinc and lead prices.

    CBH yesterday said it had $56 million of cash on hand at the end of the year, down from $90 million at the end of September.

    CBH's managing director, Stephen Dennis, attributed nearly $22 million of the $34 million reduction to its repurchase of convertible notes at discount prices and redundancy charges associated with its most recent restructure.

    He said it was too early to say whether it had been cash positive in December, but even if it was not, it would have been "reasonably close" to break even and the situation had improved this month.

    "We think our operation is at break-even point now," he said. "Our cash bleed has been addressed."

    In late December, Perilya received a $10 million advance from Zhongjin, after an operating loss of $37.8 million between July 1 and October 31 had left it with only $10.8 million.

    Perilya has also slashed its production, although not as severely as CBH, and hopes to get its production costs down to US60-65c (83-90c) a pound from this month, compared with the zinc spot price of US58c a pound.

    "We are not suggesting that today we are cash positive at all," said Perilya's managing director, Paul Arndt. "In terms of physical output, we are ahead of where we expected to be at this point."

    Mr Dennis said CBH planned to make further cuts to Perilya's production if its takeover succeeded. It would not proceed with a $30 million project to integrate CBH's Rasp deposit with Perilya's Broken Hill operations until metal prices rebounded.

    Perilya objects to CBH's takeover proposal on grounds including the predator's high debt levels and would prefer the cash injection from Zhongjin


  2. 11.6k

    Sydney - Wednesday - January 21: (RWE Aust Business News) -

    The Takeovers Panel has declined to conduct proceedings on an

    application dated 12 January from Broken Hill Operations (a wholly owned

    subsidiary of CBH Resources (ASX:CBH)) in relation to the affairs of

    Perilya (ASX:PEM)

  3. 1.5k

    CBH not proceeding with takeover bid.

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