Zinifex stumbles in debut
 
Dudley White and Stuart Kelly Bloomberg News
Tuesday, April 6, 2004
SYDNEY Shares of Zinifex fell more than 6 percent Monday in their first day of trading after the world's second-largest zinc miner raised less than hoped for in an initial share sale.
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The stock fell to 1.83 Australian dollars, or $1.38, on the Australian stock exchange, which compared with the 1.95 dollars at which Zinifex sold shares Friday to professional investors.
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Zinifex, formerly known as Pasminco, had planned to sell shares for between 2.10 dollars and 2.70 dollars apiece. The Melbourne-based company raised 960 million dollars in the offering. It had hoped to raise as much as 1.35 billion dollars.
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Pasminco's creditors appointed outside managers in September 2001 after the company's debt swelled to 3.4 billion dollars, foreign exchange losses soared and prices slumped for zinc, which is used to make steel resistant to corrosion. At the top end of the range, Zinifex's stock would have been more expensive relative to earnings than shares in a rival, Teck Cominco.
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"Resources managers in this country have long memories, and I think the name of Pasminco has been a real hurdle," said Jim Reid, a manager at Trust Co. Funds Management. "The 11th hour re-pricing psychologically shot it in the foot. It's now trading at the sort of price that makes it worth looking at."
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Zinifex sold 500 million shares, with retail investors and employees paying 1.85 dollars each.
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Pasminco shares were suspended in September 2001 after total debt tripled. The company's market value slumped to 56 million dollars when the stock was suspended, from 1.9 billion dollars in 1999.
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Pasminco's creditors in 2002 agreed to swap 2.8 billion dollars of debt for equity in the company. The share sale was delayed as the creditors waited for a recovery in zinc prices.
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Bloomberg News

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