Vic Govt Rejects First Nat Offer For Portland
Sydney Morning Herald
Monday May 21, 1990
MELBOURNE: First National Resource Trust, a 10 per cent partner in the$1.8 billion Portland aluminum smelter, wants to buy some or all of the Victorian Government's 35 per cent stake in the smelter, but the Government will not deal with it.
A sale of its entire 35 per cent stake in the 327,000-tonne-a-year smelter would raise $500-$700 million for the Government, but it says it is only a seller of 10 per cent, worth $140-200 million.
A spokesman said yesterday the Government was reluctant to deal with First National because "we'd prefer that the 10 per cent stake, were it to be sold, went to someone with some downstream capacity".
This is despite recent advice to the Government by the consultants Pappas Carter Evans and Koop that Victoria, while competitive in primary aluminium smelting, had "limited opportunities in secondary smelting and possibly downstream processing".
First National has been trying to discuss a purchase of some or all of the Government's holding in the smelter for several months but has got nowhere. The executive director of First National Managers, Mr Paul Exell, said yesterday the group "definitely" was interested in buying some or all of the holding.
He said a purchase of the whole stake "obviously" would mean a big restructuring for First National, which was formed as a $100 million trust in 1985 to take 10 per cent of the smelter.
But he said First National's unit holders had fared very well since joining the trust and had confidence in the smelter, although he conceded that a restructuring involving buying the Government's entire stake would be "very difficult to do" in the current depressed sharemarket.
Plans to expand the smelter have been on ice for 18 months while the partners, including Alcoa (45 per cent) and the Chinese Government (10 per cent), negotiate power tariffs with the government.
"If you are going to expand that smelter you need to get public funds in there and I believe we are the vehicle to do it," Mr Exell said.
The smelter was valued at $1.8 billion to $2 billion by Coopers and Lybrand last December as part of Furst National's takeover defence against Triako Resources.
This implied a price of $180-$200 million for 10 per cent or $630-$700 million for 35 per cent.
But aluminium is trading below the average price on which Coopers relied, and its valuation is now seen as generous.
First National units are trading at $1.12. Adding $25 million for its debt gives $137 million for 10 per cent of the smelter, or about $1.4 billion for the lot.
© 1990 Sydney Morning Herald
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