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THE IRON CURTAIN DROPS ON FLINDERS MINES

By John Helmer, Moscow

Magnitogorsk Metallurgical Combine (MMK) announced Thursday it will not agree to extend the time for its agreement to buy Flinders Mines, an Australian iron-ore miner, after the deal deadline or quit date expires tomorrow, June 30. “Magnitogorsk’s decision on its future actions regarding the agreement will be taken only when the results of the court hearings are known,” Kirill Golubkov, a spokesman for MMK, said.

Hours later, on Friday morning Australian time, the Australian Government Takeovers Panel issued a statement [1] that it refuses to open proceedings challenging the Russian action and obliging MMK and Flinders Mines to extend the time for negotiating the takeover. The panel, which has enforcement authority to rule on transactions involving publicly listed companies, announced that it does not have evidence to judge that the Russian injunction blocking the deal lacked legal power or that there has been unlawful collusion between MMK and the MMK shareholder seeking the injunction. The panel also said it “did not consider that it would be likely to interfere with the terms of the scheme of arrangement or scheme implementation agreement, which have been disclosed to the market, or otherwise make orders affecting the contractual rights of the parties…The Panel concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances. Accordingly, the Panel declined to conduct proceedings.”

The next date for proceedings in the Chelyabinsk Arbitrazh Court is scheduled for July 2, when Judge Natalia Bulavintseva has called for argument on whether to maintain the injunction against the deal obtained by a minority shareholder, Elena Egorova, on March 30 [2]. The judge is now likely to rule that the issue is moot because the transaction has ended.

Flinders Mines has made no comment.