Australia's BC Iron agrees $341 million bid by Regent Pacific

Thu Jan 20, 2011 11:02pm GMT

* Cash offer a 4pct premium to last trade

* Regent says no change to BC Iron management, strategy

* Consolidated Minerals biggest shareholder (Adds detail)

SYDNEY, Jan 21 (Reuters) - Australia's BC Iron has recommended a cash takeover offer from major shareholder Hong Kong's Regent Pacific Group in a deal valuing the company at A$345 million ($341 million).

Regent, which is BC Iron's second-largest shareholder with a 19.87 percent stake, is offering A$3.30 cash per share. The offer is a 4 percent premium to BC Iron's last trading price of A$3.17.

BC Iron's biggest shareholder is Consolidated Minerals, owned by Ukrainian billionaire Gennadiy Bogolyubov's Palmary Enterprises.

BC Iron and Regent's shares were placed in a trading halt on Wednesday pending the transaction. BC Iron's core asset is its Nullagine coal project, a 50-50 joint venture with Fortescue Metals .

"Regent Pacific is seeking to be a long term player in both the growth and development of BC Iron and the Australian iron ore sector," Regent Pacific Chief Executive Jamie Gibson said, adding there were no plans to change the target's current management or strategy.

The venture plans to utilise Fortescue's transport facilities at its Christmas Creek iron ore mine, 50 kilometres south of Nullagine, to rail ore to Port Hedland for shipping to overseas steel mills.

Iron ore is currently being stockpiled and the first shipment from Port Hedland is expected in the first quarter of 2011 -- four years after BC Iron listed on the Australian stock market. The company plans to export 1 million tonnes by June 2011 and then operate at an annual rate of 3 million tonnes.

Under the terms of the partnership, Fortescue buys BC Iron's share of the iron ore at the "mine gate" and assumes responsibility for shipping and marketing.

Fortescue is already operating at an annual rate of 40 million tonnes and is looking to boost that to 55 million this year.

Spot iron prices are trading at their highest level since April 2010.

($1 = 1.012 Australian Dollars)

(source: Reuters, Reporting by Michael Smith; editing by Balazs Koranyi)