ALLENS ARTHUR ROBINSON and Linklaters advised on the proposal to create the world’s largest zinc metal producer under an agreement between Australian company Zinifex and Belgian firm Umicore to merge their zinc smelting and alloying businesses.
The $4 billion worth of smelting assets will be spun off into a new joint venture company called Nyrstar, to be headquartered in London, and incorporated in Belgium.
As well as two mines, Zinifex owns four smelters, with two in Australia, one in the United States and the other in the Netherlands. Along with zinc alloys, chemicals and building products, Umicore provides metal alloys for a large range of products.
The new company will employ 4,500 people on four continents and produce 1.2 million tons of zinc and zinc alloys per year.
Allens said it assisted Zinifex’s general counsel, Francesca Lee, to advise the company on all aspects of the transaction. The law firm’s team included Craig Henderson, Gadi Bloch, Paul Washington, and Wei-Ee Cheah.
Linklaters De Bandt, the Belgian arm of Linklaters, acted for Umicore.
After approval is gained from Zinifex shareholders in July this year, it is planned that Nyrstar will be formed during September. An initial public offer (IPO) of shares in Nyrstar will also be made soon after approval is gained from shareholders.
Allens lead partner Craig Henderson said the scale and multiple jurisdictions involved made it a complex deal, which involved Australian and Belgian parties; a joint venture vehicle incorporated in Belgium and intended IPO regulated under Belgian security laws.
The assets to be transferred to the IPO also include shares in US, European, Chinese and Thai companies, and Umicore has a substantial holding in a listed Thai company.
The IPO is also likely to be marketed to the US among other jurisdictions, so it is necessary to comply with US securities laws.
“In a transaction like this, where the parties are contributing different assets to a new joint venture vehicle, it’s obviously important to ensure that the parties’ respective economic interests in the joint venture reflect the value they are bringing to the vehicle,” said Henderson.
“This exercise was complicated by the fact that the parties’ objective was that their respective economic interests should be determined as at the time of their exit from the joint venture, via an IPO of Nyrstar, and that in the meantime, Nyrstar should operate as a 50-50 joint venture between Zinifex and Umicore.
“While it is hoped that an IPO will occur later this year, it’s always possible that equity market conditions may not allow for an IPO for some time.”
This meant his team had to develop some novel mechanisms for determining the parties’ relevant economic interests in Nyrstar that accommodated the lack of certainty of the timing of the IPO, and also allowed Nyrstar to operate as a 50-50 joint venture pending an IPO.
Allens also acted for Zinifex directors when the company was floated following Pasminco Limited’s voluntary administration in 2001. The law firm advised on the formation of Zinifex and the IPO which took place in 2004.