Anaconda Nickel Limited 18 – Panel Decides Dispersal of Excess Shares Appeal from Decision in Anaconda 16/17 [12/03/2003] The Takeovers Panel

12 March 2003

ANACONDA 16-17 PANEL DECIDES DISPERSAL OF EXCESS SHARES

APPEAL FROM DECISION IN ANACONDA 16/17 (ANACONDA 18)

Anaconda 16-17 decision

On Friday 07 March 2003, the Sitting Panel in the Anaconda 16-17 proceedings advised parties that it had decided to make a declaration of unacceptable circumstances in relation to the affairs of ANL. It also provided draft orders requiring dispersal of the Excess Shares in Anaconda subscribed for by MP Global (under the Corporations Act the Panel must provide draft orders to affected persons for comment prior to making the order).

The Anaconda 16 and 17 applications were from Anaconda Nickel Ltd (ANL) and Glencore International AG (Glencore), and were made on 21 February 2003.

Application for Review - Anaconda 18

On Tuesday 11 March 2003, MP Global applied for a review of the Anaconda 16-17 decision and the proposed orders in the Anaconda 16-17 decision.

The decision by the Anaconda 16-17 Panel

The Anaconda 16-17 Panel decided that unacceptable circumstances are constituted by the disposition of certain `Excess Shares' which were to be issued to MP Global under a rights issue (the Rights Issue) by ANL, by way of an agreement (the Agreement) between MatlinPatterson Global Opportunities Partners LP (MP Global) and Australian Investments United Pty Ltd (AIU). The Excess Shares were those shares to be issued to MP Global on 21 February 2003 under the Rights Issue which would, without disposition pursuant to the Agreement, have caused MP Global's voting power in ANL after the completion of the Rights Issue to be greater than its voting power immediately before the allocation and issue of ANL shares pursuant to the Rights Issue.

The Anaconda 16-17 Panel considers that it is unacceptable for MP Global to exercise all the ANL rights it had acquired under its Rights Offer, and then seek to determine the identity of the purchaser of the Excess Shares. In such circumstances the Sitting Panel considers that the onus would be on MP Global to demonstrate that the subsequent purchaser of the Excess Shares (here AIU) is not an associate.

However, the Anaconda 16-17 Panel's decision that the Agreement constitutes unacceptable circumstances is based on its view that the public interest requires dispersal of the Excess Shares in an open, competitive process, rather than any determination of any association between MP Global and AIU. The Anaconda 16-17 Panel considers that a sale through such a process is required to ensure that shares in ANL are acquired in an efficient, competitive and informed market.

The Anaconda 16-17 Panel will publish the full text of it its reasons for decision on it's the Panel's website when they are finalised.

The Sitting Panel in these proceedings is Brett Heading, Tro Kortian, Peter Scott.

Matters that did not need to be determined in Anaconda 16/17

In light of the above, the Anaconda 16-17 Panel considers that it was not necessary for it to make any finding as to whether or not:

(a) the Agreement was effective to place MP Global in the position of a bare trustee in relation to the Excess Shares. If the Agreement did have this effect, MP Global would have avoided breaching section 606 in relation to the Excess Shares by virtue of the exception set out in section 609(2); or

(b) MP Global and AIU were or are associates for the purposes of Chapter 6 of the Corporations Act.

Proposed orders in Anaconda 16/17

The Anaconda 16-17 Panel proposed to make orders that the legal and beneficial title to the Excess Shares vest in ASIC for sale by a stockbroker appointed by ASIC by way of a bookbuild. AIU would be excluded from this process, as would MP Global and Glencore as the Panel understands that section 606 would prohibit any acquisition of Excess Shares by them. The Anaconda 16-17 Panel proposed that persons associated with any of AIU, MP Global, Glencore or ANL be prevented from acquiring any Excess Shares. However, following the receipt of the review application, the Anaconda 16-17 Panel has decided it would be more efficient for all concerned if it did not make the final orders it had proposed, leaving the decision on orders to the Review Panel. In doing so, the Review Panel has retained the interim order that it had made preventing further sale, transfer or voting of the Excess Shares until the Anaconda 16-17 and 18 matters have been decided.

Application for review of decision in Anaconda 16/17

The Substantive President of the Panel has appointed the members of the Anaconda 9 Review Panel (Simon McKeon (President), David Gonski and Ian Ramsay) to consider the Anaconda 18 application.

The Review Panel has not yet sought the views of persons potentially involved in the Anaconda 18 application and has therefore formed no views in relation to the application.

Nigel Morris
Director, Takeovers Panel
Level 47 Nauru House, 80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3501
nigel.morris@takeovers.gov.au