WMC to demerge after 93pc back plan

The resolution to split into two separately listed groups, Alumina Ltd and WMC Resources, received a 93.15 per cent yes vote, with a record 87 per cent of the company's shares participating.

But it was not all plain sailing at the occasionally fiery meeting of shareholders, chaired by Ian Burgess, in Melbourne.

Former Pasminco, Mayne Group and National Bank chairman Mark Rayner suffered the humiliation of his proposed appointment to the new Alumina board being defeated on a show of hands. His appointment was later confirmed on a poll, with 88 per cent of the votes in support. Mr Burgess later created a stir when he took a swipe at AMP, the only sizeable institutional investor (1.8 per cent at last count) to vote against the demerger proposal.

Noting that AMP's rejection accounted for more than 60 per cent of the small ``no" vote, Mr Burgess said that its ``investment form of late equates to the English cricket team". Mr Burgess was chairman of AMP until April 2000.

Ahead of the vote on the demerger, Mr Burgess repeated at length why the board wanted it.

``We believe that if WMC does not demerge we are putting at risk a significant amount of shareholder value," he said.

Directors had an ``absolute conviction that Alcoa will come back" a reference to Alcoa's spurned offer late last year to bid $10.20 a share for the company, one aimed at securing WMC's 40 per cent share in their AWAC alumina joint venture. He said that ``exclusivity" provisions of the AWAC joint venture agreement deterred other potential buyers.

``If Alcoa did make a takeover bid for WMC, we believed there will be little or no competition," Mr Burgess said.

He told the 280 shareholders in attendance, with 184 observers, that the demerger was not about attracting takeover bids. ``We are not absolutely not!"

He said WMC now was not on the same playing field as other listed companies. ``In the event of a takeover with our current structure, we believe Alcoa would be the only bidder and shareholders would receive less-than-fair value for their shares."

Analysts have criticised the demerger as being value destroying in the absence of firm takeover bids for Alumina or WMC Resources demonstrating otherwise. Some institutional shareholders after the meeting also suggested not enough had been said by Mr Burgess about the downside of the demerger.

One of those was Jim Reid, investment manager at Trust Company Funds, which voted against the demerger. He said that apart from the sad demise of a major diversified miner, the meeting should have been told that the split into two companies would force higher costs of capital, lower credit ratings, lower index ratings and the duplication of costs.

Departing chief executive Hugh Morgan said he was pleased with the vote. He said the demerger was not about attracting takeover bids. ``We are not trying to sell these enterprises we are trying to make sure that, like other companies, we don't have lead in our saddlebags when there is only one competitor [Alcoa]."

No looking back in anger for departing miner Page 49