Fortescue Metals Group has retained enough shares in Atlas Iron to enable it to frustrate Gina Rinehart’s Hancock Prospecting from moving to 100% control of Atlas.
Having bought 19.9% of Atlas two months ago, Fortescue said yesterday it had reduced its stake to 11.4%, saying it intended to keep a major stake in the company for “strategic reasons”.
“Fortescue has considered its options with regard to the 19.9 per cent shareholding in Atlas Iron and has decided to retain a substantial shareholding for strategic reasons reflecting our confidence in the long-term fundamentals of the iron ore sector in the Pilbara,” FMG chief executive Elizabeth Gaines said in a statement to the ASX.
“Fortescue looks forward to participating in the future of Atlas Iron and is confident that the directors of Atlas Iron will continue to act in the best interests of all shareholders.”
Ms Gaines said also FMG would “actively participate” in proposed talks with the State Government over Atlas’ rights to export slots in Port Hedland.
That 11.4% stake is enough to stop Hancock from taking 100% of Atlas. Hancock has more than 56% of Atlas’s listed shares.
It will be enough to force Hancock to keep Atlas listed on the ASX (with all the attendant costs of listing fees, financial reports and annual meetings).
More importantly it will force Atlas to keep a board structure and will be enough to prevent Atlas from assuming total control over any revenues and cash flows from its iron ore sales and other businesses (shipping lithium ore and manganese)
FMG and Hancock emerged with 19.9% stakes in Atlas within days of each other in June, ultimately thwarting Mineral Resources’ cosy, agreed all share bid for the company.
Hancock has since bid $390 million cash for Atlas, an offer which is now backed by the target’s board.