China Still Shopping
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Chinalco's jilting by Rio Tinto has not changed China's appetite for offshore assets.Some commentators had wondered if the way Rio wriggled away from Chinalco's embrace would cause China to rethink or go elsewhere.It is still sniffing around Australian companies, with the latest, the Gindalbie-Ansteel deal & #160;wrapping up late last week with a series of board changes to reflect Ansteel's 36% stake in Gindalbie. & #160;Friday saw a state-owned investor buy 17% of the big Canadian miner, Teck Resources; a state-owned oil company confirm its interest in the Argentinian assets of a big Spanish oil company, and a Beijing-owned car company emerge with a late bid for the Opel car arm of General Motors in Germany.Teck said it will sell & #160;a 17.2% stake to & #160;China Investment Corp in a deal that will help Teck cut down debt by raising & #36;US1.5 billion.Teck said the placement will see & #160;101.3 million shares at C & #36;17.21 each, a 7% discount to Thursday's closing price of C & #36;18.50 on the Toronto Stock Exchange.Teck is a leading & #160;producer of zinc, copper, and metallurgical coal. & #160;CIC will acquire the & #160;stake through a private placement.(CIC has invested more than & #36;200 million in & #160; & #160;Goodman Group and stands to provide more, in exchange for lifting its stake in the Australian property group).The deal will give CIC a 6.7% voting stake in Teck.The deal provides China with no guaranteed share of Teck's production. Teck said that CIC has said it is acquiring the shares & quot;for investment purposes as a long-term passive financial investor. & quot; The fund has agreed to hold the stock for at least a year after the deal closes in mid-month (Source). & quot;CIC has also agreed that after the one year hold period, it will not sell the purchased shares to a participant in the worldwide mining, metals or minerals industries, or to a material customer of Teck. & quot;In the event of a takeover bid for Teck, CIC will be permitted to tender its shares, provided that the bid has features associated with a & quot;permitted bid & quot; customary in Canadian shareholder rights plans, or is supported by the Teck board, and in certain other circumstances, & quot; Teck said in the statement.CIC is a sovereign wealth fund and was created in 2007 to manage part of China's foreign exchange reserves for higher returns.It hasn't done very well, so far.The & #36;US200 billion fund plunged into deals with loss-making investments in Wall Street firms, & #160;Morgan Stanley & #160;and Blackstone.Teck needs the money: & #160;it added around & #160; & #36;US10 billion in debt last year to buy Fording Canadian Coal Trust, which made it a top producer of coking & #160;coal, which is used & #160;in steel making.Teck has cut its dividend, laid off workers, sold & #36;US1.5-billion & #160;in assets, restructured its loans, cut capital spending and issued & #36;US4.2-billion & #160;in junk bonds to raise cash to reduce the loans from the Fording deal.That deal was done at the top of the market, just as Rio bought Alcan for a top of the market price.Meanwhile the state-owned & #160;China National Petroleum Corp (CNPC) is among bidders looking to buy the Argentinian unit of Spanish oil major Repsol.Bloomberg said that Zhang Guobao, the vice chairman of China's top planning agency, the National Development and Reform Commission, said CNPC was holding talks with Repsol.Reuters also reported that & #160;CNPC, the country's largest oil company, and the China National Offshore Oil Corp Ltd (CNOOC) were competing for Chinese government approval to bid for YPF, in a deal that could be worth around & #36;US17 billion.And state-owned Beijing Automotive (BAIC) revealed an indicative, offer for & #160;Opel.The bid was leaked to the media ahead of & #160;a Friday deadline for GM lawyers to submit papers to US federal bankruptcy court which is to decide by & #160;July 10 on a plan to create a & quot;new GM & quot; with brands Chevrolet, Cadillac, Buick and truck unit GMC.Canadian car parts group, Magna, backed by Russian partners, is the frontrunner to buy Opel, but a & #160;Belgian & #160;company RHJ International has emerged in the past two weeks as a third & #160;bidder, despite raising doubts by revealing a big loss and a shortage of cash.Any business plans submitted will be evaluated by PriceWaterhouse Coopers on behalf of the German Government, since it will have to offer more state aid after already extending Opel a six-month 1.5 billion euro ( & #36;2.1 billion) bridge loan that matures on November 30.Among the recent Chinese deals:July 2, 2009- Chinalco confirms it tipped & #36;US1.5 billion into Rio Tinto's rights issueJuly 2, 2009- & #160;Ansteel wraps up more than & #36;A534 million to help finance a big iron ore project in WA and will emerge with a 36% stake in Gindalbie.June 30, 2009- & #160;China Sci-Tech Holdings completes & #36;US211 million ( & #36;A261.3 million) purchase of & #160;the Martabe gold and sliver mine in Indonesia owned by OZ Minerals (See below).June 24, 2009 - Sinopec, China's largest oil refiner, agreed to buy Swiss oil explorer Addax Petroleum Corp & #160;for & #36;US7.24 billion, a deal that will give it access to & #160;oil areas in West Africa and Iraq.June 9, 2009 - Canadian mining and exploration company Consolidated Thompson said it had finalized terms of an agreement with China's Wuhan Iron and Steel Corp for a & #36;US240 million investment.May 24, 2009 - PetroChina, Asia's largest oil and gas producer agreed to buy Keppel Corp's 45.5% stake in Singapore Petroleum Company for S & #36;1.47 billion ( & #36;US1.02 billion).April 30, 2009 - Chinese state-owned China Nonferrous Metal Mining Group agreed to take a majority stake in Australian rare earths miner Lynas Corp Ltd & #160;for A & #36;252 million ( & #36;US186 million).April 1, 2009 - Australian zinc miner OZ Minerals & #160;agreed to sell most of its assets to China's Minmetals for & #36;1.21 billion.Feb 24, 2009 - Chinese steel mill Hunan Valin Iron and Steel said it will pay & #36;US1.2 billion ( & #36;US770 million) for a 16.5% of & #160;Fortescue Metals Group.February, 2009 - Shenzhen Zhongjin Lingnan Nonfemet, a top three Chinese & #160;zinc producer, completes the purchase of a controlling stake in Australian zinc miner Perilya for around & #36;45 million.And, on Friday, Rio Tinto wrapped up its huge rights issue (that was called as an alternative to the Chinalco deal), saying its Australian shareholders had taken up 94.76% of their entitlements to their share of the issue.On Thursday, UK shareholders in the Plc company had taken up 96.97% of the & #160;discounted, fully underwitten & #36;US15.2 billion rights offer, the fifth-biggest on record, putting the indebted Anglo-Australian group on a firmer financial footing.Chinalco pumped in & #36;US1.5 billion to maintain its 9.7% stake in the Plc company. & #160;
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Daniel Kertcher established Platinum Pursuits in 2001 as a vehicle in which to share his knowledge of strategies to use the financial markets to grow wealth, with the aim of achieving financial freedom by making your money work for you.
His argument is that until you become financially literate and develop a method where you're able to get a reasonable return on your capital (i.e. making your money work for you), you will instead be forever working hard for your money.
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To be truly financially literate, it can pay to explore all the options available when you are in a position to try to get ahead in life. Daniel currently presents free introductory seminars nationally on selected dates from February to November. |
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