Oz Debt Position 'not Clear'

Sydney Morning Herald

Wednesday December 3, 2008

Jamie Freed

OZ MINERALS, which has suspended trading to refinance a $US420 million ($661 million) loan, did not make clear in its most recent accounts the pressing need to restructure the debt facility.

"The accounts together with the [Oxiana-Zinifex] merger documentation do not provide a clear picture of the debt maturity profile for the merged entity at various points in time," said a Wilson HTM analyst, Keith Williams. "In fact, we view them as being misleading or contradictory through omission and lack of subsequent clarification."

In its half-year results released in August, OZ listed interest-bearing current liabilities of $288 million and interest-bearing non-current liabilities of $465 million in the accounts for the Oxiana portion of the merged entity. Zinifex brought little debt and a big cash balance to the merged entity, meaning the former Oxiana facilities are those that need to be refinanced.

Combined with information in its full-year accounts released in February, it appears that about $321 million of the non-current liabilities were associated with a secured loan due to mature in 2012, which covered the refinancing of its Golden Grove mine acquisition and development costs at its Prominent Hill project. Another $US105 million was associated with convertible notes due to mature in 2012.

The $288 million of short-term liabilities included a $US140 million debt facility which had been disclosed as due to mature this year and has been extended until January 31 to allow OZ time to roll it into a larger corporate facility.

Last week OZ revealed the $US420 million facility at issue was due for repayment in periodic instalments of an undisclosed size, with the first due on December 31.

Based on the accounts released in August, which listed the $US140 million facility as having a $150 million face value, the instalment payment due this month is less than $138 million.

An OZ spokesman said the company did not want to pay the instalment because it was trying to roll its two debt facilities into a new corporate facility.

He was not able to clarify whether OZ retained the option to make the payment as a last resort, or if it had given up that option as part of its negotiations to create a new facility.

In a scheme booklet for the merger, OZ said it planned to refinance its debt facilities by November but did not indicate the maturity date of either facility.

At June 30, OZ had $1.2 billion cash on hand.

© 2008 Sydney Morning Herald

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