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152929
Thu, 12/09/2010 - 19:19
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https://www.oananews.org//node/152929
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"PREFERRED SHARES TO TURN INTO LOANS"
Ulaanbaatar, Mongolia, /MONTSAME/ The Investment Agreement between shareholders of the "Oyu tolgoi" mineral deposit--the government of Mongolia, the Ivanhoe Mines Mongolia Inc LLC, the Ivanhoe Nines LTD, and Rio Tinto International Holdings Limited, expected to be amended.
The amendment will be made by changing financial method. It is caused by the fact that some people do not understand properly the method on building capital by using preferred shares.
The Oyu Tolgoi LLC will have to negotiate with the government of Mongolia and get permission in case of holding talks or negotiations with any foreign legal person, in accordance with the amendment. The government also must give the permission after negotiating with the State Great Khural and other related organizations.
At the regular cabinet meeting held Wednesday, the Minister of Finance S.Bayartsogt and the Minister of Mineral Resources and Energy D.Zorigt introduced the cabinet to results of the negotiations held with investors of the "Oyu tolgoi" mineral deposit. In addition to it, a report on procedure of the negotiations has been given by the Premier S.Batbold and these Ministers. .
According to the Premier, the ownership of 34 per cent for the Mongolian side has not been reduced, and he has firmly said it will remain as it is. "Everyone thinks that it is time to make the Oyu tolgoi deposit active, as I suggest," he said adding "we must adhere to the principle that all Mongolians benefit from it."
The Premier is in position to update some clauses of the agreement and to correct mistakes if there are any, he said. In March this year, the Premier gave obligations to related officials to negotiate with the investors for altering the agreement in more beneficial for Mongolia way. He researched a way of reducing the financing interest during the shareholders' meeting held August 2010, and then ordered the investors' side to introduce its version to the Mongolian side at upcoming meeting of the representative management council to be held December, 2010. He has underlined the financing interest of the Oyu tolgoi project will be reduced by a specific size as results of these negotiations. In spending own shares, the investors' side is to ask the Mongolian government for permission. Ministers have taken the right to sign related memorandums and amendments to the agreement. The Mongolian side's interest of debt for the financing of the project will be reduced to 6.8 per cent as well.
The Minister S.Bayartsogt has noted that the Government of Mongolia established two kinds of contracts with the investors in conjunction with exploiting the Oyu tolgoi deposit.
The Minister D.Zorigt has added that during the negotiations with the shareholders, the sides made the limits more clear in case when person with state property sells shares to any dependent from foreign governments person/s. In other words, any legal person from foreign governments registered in the Netherlands and Canada must ask the government of Mongolia on the matter and must get the written permission. "The clause about the limit already existed in the past in the agreement, so we just updated the clarification," D.Zorigt has said.
S.Bayartsogt has given a word about the preferred shares. He has said that financing never been made through preferred shares before. "All companies issue simple shares. There are various types of mechanisms for making financing. The preferred shares of the company are issued in order to reduce the financial risk. The company can finance itself. If to do that, the company has to take its entire crisis," Bayartsogt has stressed.
He has underlined that the agreement reflects four methods of financing--to make financing in way of issuing additional shares in equal size of stocks of the shareholders, to let those companies not belonging to the sides take loans, to take loans from the third person with project financing, and to issue preferred shares. In accordance with the first three methods, company has to take 100 per cent risks. In case of the last method, all risks go to the participant.
The Premier has said he gave right to related ministers to sign memorandums and documents of amendment, underlining that the government will work with a great effort to make the Oyu tolgoi project more beneficial for Mongolians.
B.Khuder
The amendment will be made by changing financial method. It is caused by the fact that some people do not understand properly the method on building capital by using preferred shares.
The Oyu Tolgoi LLC will have to negotiate with the government of Mongolia and get permission in case of holding talks or negotiations with any foreign legal person, in accordance with the amendment. The government also must give the permission after negotiating with the State Great Khural and other related organizations.
At the regular cabinet meeting held Wednesday, the Minister of Finance S.Bayartsogt and the Minister of Mineral Resources and Energy D.Zorigt introduced the cabinet to results of the negotiations held with investors of the "Oyu tolgoi" mineral deposit. In addition to it, a report on procedure of the negotiations has been given by the Premier S.Batbold and these Ministers. .
According to the Premier, the ownership of 34 per cent for the Mongolian side has not been reduced, and he has firmly said it will remain as it is. "Everyone thinks that it is time to make the Oyu tolgoi deposit active, as I suggest," he said adding "we must adhere to the principle that all Mongolians benefit from it."
The Premier is in position to update some clauses of the agreement and to correct mistakes if there are any, he said. In March this year, the Premier gave obligations to related officials to negotiate with the investors for altering the agreement in more beneficial for Mongolia way. He researched a way of reducing the financing interest during the shareholders' meeting held August 2010, and then ordered the investors' side to introduce its version to the Mongolian side at upcoming meeting of the representative management council to be held December, 2010. He has underlined the financing interest of the Oyu tolgoi project will be reduced by a specific size as results of these negotiations. In spending own shares, the investors' side is to ask the Mongolian government for permission. Ministers have taken the right to sign related memorandums and amendments to the agreement. The Mongolian side's interest of debt for the financing of the project will be reduced to 6.8 per cent as well.
The Minister S.Bayartsogt has noted that the Government of Mongolia established two kinds of contracts with the investors in conjunction with exploiting the Oyu tolgoi deposit.
The Minister D.Zorigt has added that during the negotiations with the shareholders, the sides made the limits more clear in case when person with state property sells shares to any dependent from foreign governments person/s. In other words, any legal person from foreign governments registered in the Netherlands and Canada must ask the government of Mongolia on the matter and must get the written permission. "The clause about the limit already existed in the past in the agreement, so we just updated the clarification," D.Zorigt has said.
S.Bayartsogt has given a word about the preferred shares. He has said that financing never been made through preferred shares before. "All companies issue simple shares. There are various types of mechanisms for making financing. The preferred shares of the company are issued in order to reduce the financial risk. The company can finance itself. If to do that, the company has to take its entire crisis," Bayartsogt has stressed.
He has underlined that the agreement reflects four methods of financing--to make financing in way of issuing additional shares in equal size of stocks of the shareholders, to let those companies not belonging to the sides take loans, to take loans from the third person with project financing, and to issue preferred shares. In accordance with the first three methods, company has to take 100 per cent risks. In case of the last method, all risks go to the participant.
The Premier has said he gave right to related ministers to sign memorandums and documents of amendment, underlining that the government will work with a great effort to make the Oyu tolgoi project more beneficial for Mongolians.
B.Khuder
