Anaconda Nickel Limited 15 - Panel Declines Application

Release number


  1. The Panel advises that it has today declined the application it received from MatlinPatterson Global Opportunities Partners LP (MP Global) on 20 February 2003 in relation to the affairs of Anaconda Nickel Limited (Anaconda).
  2. MP Global:

    (a) alleged that acquisitions of shares (Old Shares ) in Anaconda by Glencore International AG (Glencore) and Sherritt International Corporation (Sherritt) towards the close of MP Global's offer to acquire rights (Rights) in Anaconda (Rights Offer) constituted unacceptable circumstances; and

    (b) raised concerns about the fact that Sherritt neither sold nor exercised its Rights (which were worth approximately $5.1 million under the Rights Issue), instead allowing them to lapse.

  3. MP Global sought a declaration of unacceptable circumstances, and remedial orders, in relation to the above.
  4. MP Global also requested interim orders in relation to the timing of the allotment of shares pursuant Anaconda's 14 for 1 pro rata renounceable rights issue (the Rights Issue). The Panel decided on 21 February 2003 (see Panel Media Release 03/28) to decline one of these interim orders and declined to commence proceedings in relation to the other.


Glencore's acquisition of Old Shares on 12 and 13 February

5. The Panel determined the acquisition of Old Shares by Glencore on 12 and 13 February did not constitute unacceptable circumstances because the acquisitions were within the terms of the "Creep" exception set out in item 9 of section 611 of the Corporations Act (the Act), and the Panel did not accept arguments from MP Global as to why the Creep exemption should not have been available to Glencore in these circumstances.

Glencore's acquisition of New Shares between 17 and 19 February

6. The Panel determined that the acquisition by Glencore, on a deferred delivery basis, of Anaconda shares (New Shares) to be issued under the Rights Issue (which amounted to approximately 0.2% of the fully diluted shares in Anaconda following the Rights Issue) was not material in the context of control of Anaconda and did not appear to have contributed to any unacceptable circumstances. The Panel was not satisfied that this acquisition contravened section 606 of the Act. Consequently, the Panel declined that part of MP Global's application that related to these purchases.

Sherritt's failure to sell or exercise its Rights, or accept the Rights Offer

7. The Panel was initially concerned in relation to Sherritt's motives for allowing its Rights to lapse, for no value, in light of the existence of the Rights Offer. However, following the provision of information by Sherritt in response to further questions from the Panel, the Panel accepted that Sherritt's decision was an exercise of the business judgment of its executives, without external pressures, based on commercial imperatives that the Panel accepted were plausible. Among the explanations put forward by Sherritt for its conduct were:

(a) its commercial desire to preserve the current Anaconda management to protect the reputation of Sherritt intellectual property used by Anaconda, and to maximise the possibility, in its opinion, of a settlement of significant litigation with Fluor Australia Pty Ltd (Fluor), which involves both Anaconda and Sherritt; and

(b) the fact that at the relevant time Sherritt was involved in other major transactions and Sherritt executives did not have time to devote to detailed analysis of the Anaconda transaction. Given its concerns about the impact that MP Global obtaining control over Anaconda could have on Sherritt, it argued that it was justified in acting as it did, especially since the investment in Anaconda was immaterial to it.

8. Sherritt asserted, and the Panel accepted, that the potential financial impact on Sherritt associated with these concerns outweighed the value that Sherritt could have received from MP Global for selling its Rights under the Rights Offer. Consequently, the Panel decided that Sherritt's actions did not constitute unacceptable circumstances.

Sherritt's failure to accept the Share Offer

9. The issues in relation to Sherritt's decision to allow its Rights to lapse were also raised in relation to the failure of Sherritt to sell its Old Shares to MP Global under its offer for the Old Shares (the Share Offer). The Panel decided that Sherritt's decision not to accept the Share Offer was not unacceptable for similar reasons to those relevant to its decision in relation to the Rights lapsing.

Sherritt's acquisition of Old Shares on 13 February

10. The Panel was initially concerned in relation to Sherritt's acquisition of Old Shares on 13 February 2003 (at the same time as Glencore was also purchasing Old Shares). However, no evidence was presented to the Panel that convinced it that Sherritt and Glencore were associates in relation to the MP Global offers in general or the on-market buying specifically. As there had been no breach of section 606 of the Act, and the Panel did not otherwise believe that unacceptable circumstances had arisen, the Panel also declined this part of MP Global's application.


11. This media release also contains comments from the Panel in relation to the confidentiality of Panel proceedings, as well as comments in relation to the Anaconda 15 proceedings generally (in particular in relation to the evidence provided to the Panel in, and the timing of, the proceedings).

Glencore's Acquisition of 3% of "Old Shares" on Market - 12-13 February

12. In the afternoon of 11 February, Glencore instructed its broker, Macquarie Equities, to go into the market and buy up to 3% (13.8 million) of the Old Shares. Glencore had been entitled to acquire 3% under the Creep provision for some months. Macquarie bought in the afternoon of 12 February and through 13 February, stopping when it had filled Glencore's order. It acquired Old Shares at below 12 cents on 12 February and in the morning of 13 February. It also acquired Old Shares at 12 cents on the morning of 13 February. However, the buying pressure (including that of Glencore) over the period took the price above $0.12 (which was the price offered by MP Global for Old Shares under the Share Offer). On Glencore's instructions, Macquarie continued buying over the afternoon of 13 February paying up to $0.145 per share.

13. The Panel considered the acquisition of Old Shares by Glencore on 12 and 13 February 2003, and found, on balance, that the acquisitions did not constitute unacceptable circumstances.

14. The concern of MP Global was that the acquisitions were priced, structured and timed to have maximum effect on the prospects of MP Global's offers succeeding, especially given the structure of MP Global's offers.

15. The Panel decided in Anaconda 04 to revoke the relief granted by ASIC from section 606 of the Act which would have allowed MP Global to exercise all of the Rights it acquired under the Rights Offer. However, MP Global decided to proceed with its Share Offer and Rights Offer and to acquire Rights and exercise them relying on the "Rising Tide" principle. The Rising Tide principle is that in a rights issue (or other pro rata issue) a person may acquire new shares by being issued them in the same percentage as the voting shares they held at the time immediately before the new shares are issued. On that basis, every Old Share which MP Global acquired under its offer for the Old Shares (the Share Offer) allowed it to exercise 14 Rights and retain the New Shares issued to it on the basis of that exercise. However, if MP Global held a smaller percentage of Old Shares than Rights at the time it came to exercise the Rights and acquire New Shares2 , it would be unable to exercise those Rights it held that were more than its percentage of Old Shares.

16. The acutely critical time for MP Global was the period of 12 and 13 February, when it was considering declaring its offers to be unconditional, acceptances for Rights were running ahead of acceptances for Old Shares3 and the closing date for the Rights Issue on 14 February was looming. In total, Glencore bought just under 3% of the Old Shares on-market on the two days. MP Global was concerned that Glencore's buying on these days was intended to drive up the price of the Old Shares above the Share Offer price, diverting acceptance flow from the Share Offer and maintaining the market price of Old Shares above a price at which MP Global could acquire Old Shares on-market.

17. Glencore asserted that it was perfectly entitled to acquire a further 3% of the voting power in Anaconda under the Creep exception in Item 9 of section 611 of the Act, and that the market, and MP Global had known for many months that it was entitled to do so. Glencore submitted that in buying the New Shares it was merely acting "to protect itself, and to improve its influence as a shareholder in Anaconda. It did so, and this was a natural, ordinary and predictable thing for Glencore to do."

18. Glencore further submitted that:

(a) its buying fell squarely within the Creep exception given that the buying was conducted on-market and through one single reputable broker;

(b) it was not a price setter in any of its transactions; and

(c) any price effect was small and temporary. The Panel was of the view that Glencore's buying is likely to have affected the on-market price of Old Shares during its buying period. Glencore conceded that this was possible.

19. Glencore said that there was no sinister attribute to the timing of its buying. Rather, it commenced buying Old Shares as soon as it was permitted by the FIRB. The previous FIRB approval given to Glencore applied only to the acquisition of Anaconda shares under the Rights Issue. Glencore applied for FIRB approval after the announcement of the MP Global offers and commenced buying after it received approval for on-market acquisitions on 12 February.

20. MP Global asserted that Glencore's on-market buying could be viewed as part of some improper purpose, akin, in some people's minds, to market manipulation, to keep the share price of Old Shares above the MP Global Share Offer price for the critical period. However, Glencore was entitled to acquire the shares, it did so when it became free to do so following FIRB approval (and Glencore appears to have prosecuted that application diligently and properly). There is no evidence that the instructions that it gave to its broker or the actions of the broker involved any attempt to inflate the market price of Old Shares by its buying strategy.

21. Glencore was under no obligation to assist, or even to acquiesce to MP Global's offers or strategy. Indeed, MP Global's strategy was entirely open to the type of market forces to which it found itself exposed on 12 and 13 February. It was open, as Glencore submitted, to MP Global to increase its offer price for Old Shares. As the Old Shares would constitute only 6.7 per cent of the enlarged capital of Anaconda, the overall increase in its offer cost would be relatively small. MP Global chose not to increase the bid price of its Share Offer and it created a bid structure that relied on a flow of acceptances in its Share Offer that would be unusually early in the bid compared to many other bids. In many takeovers, shareholders wait until towards the end of an offer to assess whether there is a prospect of a higher offer or rival bid.

22. In the absence of good evidence that Glencore's use of its Creep entitlement was improper, the Panel does not consider there is a basis to consider it unacceptable.

23. Glencore "acquired" 14.7 million New Shares on market over the period 17 - 19 February 2003 (on a deferred delivery basis). That was before the New Shares were issued, but after the Rights Offer had closed. Glencore paid between $0.07 and $0.09 per share. They constituted approximately 0.2% of the expanded number of shares in Anaconda.

24. Whether Glencore's acquisition of New Shares did or did not technically come within the Rising Tide principle (and thence did not offend section 606) appears open to interesting legal discussion. The Panel was not satisfied that the acquisition contravened section 606.

25. However, the Panel does not consider that the acquisitions were material in terms of Glencore's overall percentage voting power after the Rights Issue and the Underwriting Arrangements. Neither do those acquisitions appear material in terms of the success or otherwise of the Share Offer and Rights Offer as MP Global was expressly not offering for the New Shares. By the time Glencore acquired the New Shares, the Rights Offer had already closed.

26. As Glencore's acquisitions of New Shares do not appear to have contributed to any unacceptable circumstances, the Panel declined that part of MP Global's application.

Sherritt's Failure to Sell or Exercise its Rights, or Accept MP Global's Rights Offer

27. Sherritt held 517,263,138 Rights, worth $5,172,631 under the Rights Offer. It allowed them to lapse, for no value. MP Global argued that there could be no rational explanation for Sherritt deciding to forego over $5.1 million worth of value for its shareholders by not accepting its Rights Offer, not selling the Rights on-market and not exercising the Rights.

28. The Panel was initially concerned that there did not appear to be a sensible explanation. It put to Sherritt the inference that MP Global asserted i.e. that there had to be some other form of benefit for foregoing that amount of value, and the most likely source of any such benefit was Glencore since Sherritt's actions increased the likelihood that Glencore (and not MP Global) would have control of Anaconda following the completion of the Rights Issue. MP Global argued that such a benefit, if it existed, would be very easy to conceal given the very extensive, world wide range of complex mineral and other transactions which both Glencore and Sherritt conduct.

29. Initially, Sherritt failed to provide a convincing explanation of its actions, and the Panel reverted to Sherritt a number of times with questions that it considered were not answered in Sherritt's responses. As noted in paragraphs 57 to 59, after a number of requests and submissions, Sherritt provided the following as the reasons for it deciding to allow its Rights to lapse, for no value, with the relevant New Shares being taken up by Glencore as underwriter:

a. Sherritt was comfortable with the current management of Anaconda, and was concerned that, if it obtained control, MP Global might disturb the management arrangements at Anaconda, to Sherritt's commercial disadvantage. Anaconda licensed technology which Sherritt had developed in relation to acid pressure leaching of laterite nickel ore. Implementing the process at the Anaconda plant (the Plant) had proven problematic, to the detriment of the reputation of the process and Sherritt, its developer. In the recent past, under the new management at Anaconda, that process had approached stability and functionality and Sherritt was concerned that changing the management might harm that stability, and hence the reputation and value of its intellectual property;

b. Sherritt, as the provider of the technology on which the Plant was based, was materially interested in the state of litigation between various parties involved in the construction and operation of the Plant. Anaconda (through its subsidiary Anaconda Operations Pty Ltd (AOPL)) and Fluor, the constructor of the Plant, are involved in, a major arbitration relating to certain failings in the operation of the Plant. Fluor had commenced proceedings against Sherritt and Dynatec Corporation (Dynatec) to recover from them whatever Fluor had to pay to AOPL under the arbitration between Fluor and AOPL. Sherritt considered that a change in Anaconda's current management would be detrimental to the outcome of the dispute;

c. Sherritt was also concerned that Mr. Andrew Forrest (a former CEO of Anaconda) appeared to be associated, involved or connected, in some way or other, with MP Global and its offer. Mr. Ian Delaney, the Chairman of Sherritt (who had been Chairman of Anaconda for a period) considered that Mr. Forrest returning to management control or influence would adversely affect Anaconda and the prospects of any settlement of the Fluor litigation;

d. Sherritt did not have management time to devote to a detailed analysis of the situation. At the time of the Rights Offer Sherritt was also engaged in two other transactions, the "Fording Transaction" and the "Sherritt Power Transaction". These two transactions had a combined value of approximately $2,162,250,000 compared with the value of Sherritt's Rights under the Rights Offer of approximately $5.l million. The professional fees alone for the Fording Transaction and Sherritt Power transaction exceeded the value of the Sherritt Rights a number of times over. Sherritt said that had it allowed itself to be distracted by the intricacies and intrigues of the Rights Issues and the MP Global offer, the potential loss or impact to Sherritt could have been significant. However, Sherritt's statements concerning lack of management attention needs to be considered in light of Mr. Delaney's preparedness to spend his, and his staff's time, on the morning of 13 February (Australian time) in discussing, arranging and buying 4,000,000 Old Shares (0.87%, worth $556,000) allegedly to try to engineer a higher takeover offer for the 0.53% of Anaconda that Sherritt would be entitled to after the issue of the New Shares4 ;

e. Sherritt had lost many times more than $5 million on its investment in Anaconda (by the time of the Rights Issue, Sherritt had written off its investment in Anaconda by almost $71.9 million) and the further loss of $5 million did not appear material.

30. Sherritt also argued strongly that:

a. the exercise of its business judgment should not be called into question ex post as there was no evidence that it had done other than exercise its business judgment, in difficult circumstances, in the interests of its shareholders;

b. it was entitled to make a commercial decision without fear for the impact it may have on others (in particular, MP Global); and

c. it was not under any statutory obligation to do anything in relation to the Rights.

31. MP Global did not introduce any evidence of association or manipulation, apart from testimony concerning a number of telephone conversations between principals of MP Global and principals of Sherritt and Glencore. MP Global's evidence of those conversations was contested by the other parties and in the absence of other evidence the Panel did not find MP Global's evidence persuasive.

32. The Panel found that when it was finally able to gather and arrange Sherritt's evidence explaining why it took the decision to allow its Rights to lapse, that evidence presented a plausible explanation which MP Global failed to rebut. The Panel declined to make any declaration that Sherritt's actions constituted unacceptable circumstances either on the grounds that Sherritt and Glencore were associates or otherwise.

Sherritt's Failure to Accept the MP Global Share Offer

33. Sherritt did not accept the MP Global Share Offer for its 40,947,367 (approximately 8.87%) Old Shares. Had it done so at the offer price of $0.12, and then sought to acquire New Shares, Sherritt would likely have either acquired twice the number of New Shares as it owned Old Shares, or made a profit of up to $1,900,000. This is based on the last price for the Old Shares trading separately on 6 March 2003 following the close of the Rights Offer i.e. $0.068.

34. MP Global raised the same concerns about Sherritt's failure to accept the Share Offer as it raised concerning Sherritt's decision to allow its Rights to lapse. Sherritt raised the same explanations.

35. The Panel made a similar decision in relation to MP Global's assertions concerning Sherritt's decision not to accept the MP Global Share Offer as it found in relation to Sherritt's decision to allow its Rights to lapse. The Panel decided that Sherritt's evidence presented a plausible explanation of why it did not sell to MP Global although this decision involved giving up the opportunity for up to $1.9 million profit.

Sherritt's Acquisition of "Old Shares" on Market - 13 February

36. Sherritt instructed its broker, JB Were, to acquire Old Shares on-market on the morning of 13 February 2003. Were acquired 4.0 million shares at an average price of $0.139 per share. They constituted 0.87% of the Old Shares.

37. MP Global asserted that Sherritt's buying of Old Shares on-market on 13 February was evidence of collusion between it and Glencore in seeking to prevent the success of MP Global's offer. That would have caused unacceptable circumstances, as well as a breach of section 606.

38. Sherritt put forward a number of reasons explaining its decision to acquire the Old Shares. They included limiting the risk that MP Global obtained control of Anaconda, causing any subsequent bidder to have to make its bid for Old Shares at a higher price, and increasing the likelihood of Glencore remaining in control of Anaconda. In the absence of any evidence of association, or acting in concert, between Sherritt and Glencore or of market manipulation, the Panel did not consider that Sherritt's buying of Old Shares caused unacceptable circumstances.

39. The Panel was concerned at the evidence that a second major shareholder in Anaconda went on-market during a critical time in MP Global's offer, at prices well in excess of the Share Offer price, with no intention of making a general offer to all Anaconda shareholders and with the intention of affecting the outcome of a takeover.

40. However MP Global's strategy and bid structure was vulnerable to such actions, as noted in relation to Glencore's buying and MP Global had no right to expect such actions would not happen.

41. The Panel declined this part of MP Global's application on the basis of:

a. the relatively small size of the buying by Sherritt;

b. the fact that the market had already moved past MP Global's offer price (albeit perhaps due to Glencore's buying);

c. the fact that there was no evidence presented that convinced the Panel of an agreement between Sherritt and Glencore in relation to the MP Global offers in general and the on-market buying specifically; and

d. the fact that Sherritt owned well under 20% of Anaconda.

42. The fact that Sherritt appears to have commenced this action without, according to its evidence, a proper understanding of the Australian market, the terms of the current offer and Australian takeovers law is concerning. It would have been prudent for Sherritt to seek Australian counsel's advice before conducting market affecting transactions during a takeover offer.

Interim order

43. The application sought an interim order from the Panel either that:

(a) Anaconda not allot and issue Anaconda shares under Anaconda's rights issue (New Shares) prior to 25 February 2003; or

(b) if Anaconda issues New Shares before 25 February 2003, MP Global nevertheless be permitted to exercise all of its rights in Anaconda provided that MPL disposes (to a party not an associate of MPL) of any New Shares which result in MPL's voting power in Anaconda being in excess of the voting power MPL would have had, if all New Shares are disregarded, at the end of 25 February 2003.

44. The Panel received submissions from the affected parties in relation to the interim order in paragraph (a) and decided not to grant that interim order. Consequently, the Panel said that Anaconda was free to proceed to allot the New Shares prior to 25 February 2003.

45. The Panel decided not to commence proceedings in relation to the interim order described in paragraph (b). The Panel considered that these matters were more appropriately considered by ASIC under an application for relief lodged by MP Global with ASIC on 19 February 2003.


46. The Anaconda proceedings appeared to be subject to more than usual comment in the media. The Panel was materially concerned that confidential information provided to the Panel and to parties in the proceedings appeared to be reflected in some media articles on the proceedings, despite parties having given undertakings to the Panel to respect the confidentiality of information provided by parties.

47. The Panel regrets that the media appears to have been used by parties in the Panel's proceedings, including Anaconda 15, seeking to gain tactical advantages in their campaigns.

48. The Panel received a number of significant complaints from parties in the Anaconda proceedings, and especially in Anaconda 15, about the publication of information which they considered had been provided to the Panel, and the other parties, in confidence. They said that had they known that the information would be leaked they would have been more restrained in providing that information. The Panel was criticised by parties for not taking firmer action against such breaches of its Rules.

49. In particular, in the Anaconda 15 proceedings one of the parties had concerns in relation to the inclusion of legitimately confidential information in its submissions to the Panel. The fact that the party was initially reluctant to provide this information to the Panel contributed to the length of the Panel proceedings. However, the Panel understood the party's concerns in relation to the provision of this information given the potential for it to be prejudiced in the Panel proceedings if the information was not provided, compared with the adverse commercial consequences that it could suffer if the information was disseminated outside the proceedings.

50. The Panel takes breaches of its Rules seriously. In these proceedings it sought statutory declarations from each of the parties, and from each of their advisers concerning the apparent breaches of confidentiality undertakings to the Panel. The Panel recognises that finding the evidence in relation to leaks is notoriously difficult. Where there appear to be valid concerns about breaches of its confidentiality rules the Panel will take reasonable steps to ascertain the identity of the person who has leaked other parties' confidential information. Where the Panel finds evidence showing that the leak has come from a specific person or party it will treat the offence seriously.

51. The Panel has consistently been told, in surveys it conducts amongst parties and the business community, that the Panel's proceedings are more likely to be conducted quickly, and in an open and frank manner, if information provided to the Panel is not disclosed outside Panel proceedings. Like the London Panel, the Australian Takeovers Panel agrees with this approach and considers that the restraint of parties in previous proceedings has contributed to the success of the Panel. In saying this, the Panel has no wish, or right, to influence what or when Australia's media reports on the Takeovers Panel, its operations or proceedings. However, parties who wish to take advantage of the speed, cost effectiveness and commercially efficient nature of the Panel proceedings are well advised to observe the confidentiality undertakings they give to the Panel. The Panel continues to monitor compliance with its Rules on confidentiality, and continues to listen to the market, parties and participants to ensure that conduct within its proceedings, and its own Rules, meet the standards expected of parties and the Panel.


52. The Anaconda 15 proceedings were characterised by difficult issues of evidence, policy and a truly unique set of circumstances.


53. A good deal of the evidence on which these proceedings were based consisted of statements about a large number of telephone conversations between the protagonists made over a short period of intense activity at the peak of MP Global's offers. As would be expected, there were material disputes, lack of recollection, and initial errors in dates and times, concerning a large number of these conversations. It appears that the parties made very few detailed records at the time of the telephone calls. Eliciting a reasonable estimate of the content of the conversations and the reliability of the various recounts took a material amount of effort on the part of the Panel and on the part of the parties.

54. Further, many of the issues raised concerned alleged association and decisions or agreements to act in concert. Most evidence in relation to association, or acting in concert, is likely to be circumstantial. Rarely in enquiries do parties to such agreements carefully document them and leave them on file for production. These proceedings were little different to many which the Panel has had to consider in relation to questions of association. Decisions in these cases are frequently made on an "on balance" basis and taking a view on the inferences which might properly be drawn from parties' commercial behavior and from assertion evidence about conversations between parties who are not only interested in the proceedings, but in intense commercial competition. Eliciting such evidence will usually be time consuming, frustrating for parties, and involve iterations of evidence gathering. These proceedings were no different to many.


55. The Panel received the Anaconda 15 application on 20 February. The period of six weeks from application to decision is unusually long for Panel proceedings.

56. Having received the application on 20 February, the Panel gave the parties a Brief in relation to the proceedings late on 21 February. By that time the Panel had decided the applications for interim orders and informed the parties and the market. It met on 28 February to give first consideration to parties' submissions and rebuttals to the Brief. It immediately became apparent that the responses provided by the parties required it to make further requests for information. The Panel then provided the first of a number of requests for further information to parties. Each request for information requires parties to be given reasonable time to respond and a further period for parties to provide rebuttals to the submissions tendered.

57. The pace of proceedings was further slowed because of the location of parties. Parties in these proceedings and their principals were located in Melbourne, Sydney, Perth, Toronto, Switzerland and Hong Kong. Frequently parties sought, and the Panel granted, extensions of time to respond properly to the requests for information.

58. The Panel received the last of the submissions from the parties in relation to the proceedings at the close of business on 1 April. It then met on 4 April to consider the final submissions and make its decision in relation to the proceedings. The Panel provided a draft decision to the parties on Monday 7 April for comment prior to publication.


59. The Sitting Panel decided that there had not been evidence presented to it, or which it was able to elicit, which indicated that the on-market buying of shares in Anaconda by either or both of Glencore and Sherritt constituted unacceptable circumstances, or that Sherritt's decisions in relation to the Rights Offer or Share Offer constituted unacceptable circumstances.

60. The Panel declined the application by MP Global.

61. The President of the Panel appointed the same members who constituted the Panel in the Anaconda 1, 2 to 5, 8, 11, 12, 14 and 16 applications (Brett Heading, Tro Kortian and Peter Scott) to consider the application.

Nigel Morris,
Director, Takeovers Panel
Level 47 Nauru House,
80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3501

1 Old Shares are the 461,502,243 shares on issue at the time of MP Global's Share Offer and before the issue of 6,461,031,402 New Shares under the Rights Issue.

2 The actual date at which MP Global came to determine how many Rights it could exercise is the subject of later proceedings.

3 This was fairly unremarkable, as the offer period for the shares extended until 6 March 2003. There was no time pressure for Anaconda shareholders to sell into the Share Offer. However, as various parties pointed out in their submissions, up to the time that the Rights Offer and Share Offer were declared unconditional it would have been rational for any Anaconda shareholders who wished to accept the Rights Offer to accept the Share Offer in order to assist MP Global to achieve the then minimum acceptance condition.

4 However, Sherritt did indicate that if an acceptable alternative takeover offer had been made before the Rights Issue closed, it had the procedures in place to allow it to exercise its Rights so that it could then sell both its Old Shares and New Shares into such an offer.