Harbinger foils Sinosteel bid to take full control of Midwest

Iron ore trader Sinosteel Corp is unlikely to take full control of Midwest Corp, as United States hedge fund Harbinger Capital has boosted its stake in the Australian iron ore miner to 15.09 per cent from 9.11 per cent.

Harbinger Capital's new purchase comes as Sinosteel said in its latest filings with the Australian Stock Exchange that its stake in Midwest had increased to 52.52 per cent from 50.97 per cent.

Harbinger's new filing suggested that Australia's Foreign Investment Review Board had granted it permission to buy more Midwest shares. Harbinger bought the Midwest shares at between A$6.40 (HK$48.80) and A$7.05 each, higher than Sinosteel's A$6.38 per share buyout offer.

Together with the 10 per cent held by Murchison Metals, in which Harbinger has a 19.98 per cent holding, the two companies own a combined 25.09 per cent stake in Midwest.

Harbinger and Murchison, which has said it would not accept Sinosteel's offer, would effectively block Sinosteel from taking full control of Midwest, as the mainland ore trader would need more than 90 per cent of all of Midwest shares to force the two to sell the stake, according to Australian securities rules.

Murchison on July 7 scrapped its merger plan with Midwest through a share swap but said it intended to play an active role as one of Midwest's biggest independent shareholders.