Raising money might be difficult under current market conditions for anyone:
Diamond firm shelves IPO
Oryx listing pulled after advisor Grant Thornton scuppers merger
June 12, 2000: 10:44 a.m. ET
LONDON (Reuters) - Plans to take public a mining firm with rights to a $1 billion cache of Congo diamonds fell apart Monday amid rising controversy about the role of gem sales in fuelling African wars.
South Africa's Petra Diamonds, which planned to merge with mining company Oryx to pave the way for Oryx to obtain a stock market listing, voted to adjourn indefinitely a special general meeting on the proposed deal.
Petra Chairman Adonis Pouroulis said there was no choice but to adjourn after the company's nominated advisor, Grant Thornton, said it would quit if the deal went forward. Stock market rules require listing firms to be backed by an independent adviser.
The British government has voiced concerns about Oryx's activities and its links with the governments of Zimbabwe and Democratic Republic of Congo (DRC), which are fighting together in a bloody civil war in Congo.
Oryx - incorporated in the Cayman Islands and run from Oman - was due to have floated on London's junior Alternative Investment Market on June 13 through a reverse takeover of Petra. Its plans have faced a barrage of criticism from government officials and human rights activists.
Pouroulis said he only learned of Grant Thornton's objections late on Friday. "I understand the position that they have adopted was put to them by certain regulators very late on Friday afternoon," he said.
Grant Thornton - which earlier last week said it saw no reason why the merger and listing should not proceed - refused to explain to angry shareholders why it had changed its mind. A spokesman would only say that it had a responsibility to ensure the "integrity" of the London market.
Britain's Foreign Office has been critical of firms mining diamonds in African countries at war, but a ministry spokesman said Sunday he was unaware of any official intervention.
"Trading in diamonds from war-torn DRC is distasteful," said the spokesman. "But it is for the relevant authorities such as the Financial Services Authority or London Stock Exchange to take any action on company listings."
U.K. calls for embargo
The derailment of Oryx's plan to list comes a week after the British government called for an embargo on diamonds from Sierra Leone.
Oryx denies it will be producing "conflict" diamonds from the Congo concession near Mbuji Mayi, an area that has been controlled by Zimbabwean troops for some time.
But the company has profit-sharing arrangements with Osleg, a firm linked to the Zimbabwean government, and Comiex, which has ties to the government of Congo, leading to fears that revenues will fuel the war in Congo.
Zimbabwean troops have been in Congo since 1998, supporting the government of Laurent Kabila, which is fighting rebels backed by Rwanda and Uganda.
Petra and Oryx officials said they would seek an explanation from Grant Thornton and the UK authorities to ascertain their precise objections.
If no accommodation is reached, the two would look at the possibility of listing their shares on a more "transparent" overseas stock market, possibly in North America, Oryx Deputy Managing Director Geoffrey White told Reuters. This could be achieved by buying out all Petra's outstanding shares, he said.
The combined Oryx-Petra would have a market capitalization of around œ90 million ($136 million), based on Petra's share price before trading in its shares was suspended, White added.
PHIL
(from CNN/fn) |
