EURASIAN NATURAL RESOURCES CORPORATION 
By LONDON (Reuters) - The billionaire founders of miner ENRC (>> Eurasian Natural Resources Corporation) are unlikely to improve a buyout offer first indicated last month, as they hammer out final details ahead of a June 24 deadline, sources with knowledge of the matter said.
ENRC's founding trio and key shareholders - Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev want to buy out minority investors to take the group private after more than five years of bitter boardroom battles, corruption probes and an acquisition spree that left $5 billion (3.2 billion pounds) of debt.
The bidders, backed by the Kazakh government, have until Monday at 5 p.m. local time to make a firm offer for the group. A third extension to that deadline could still be requested, but the sources said that was not expected.
The cash-and-shares offer outlined last month - and rejected by ENRC's committee of independent board members - is set to remain unchanged, the sources said.
The bidders, seeking to buy out the 46 percent of ENRC they do not already own, sketched an offer comprising $1.6 billion cash, plus the Kazakh government's 27 percent stake in rival Kazakhmys (>> Kazakhmys plc).
"There are no more Kazakhmys shares and there will be no more cash," one of the sources said, pointing to ENRC's already heavy debt burden, which limits financing options.
In reality, this means a lower bid, given a 20 percent fall in Kazakhmys shares since that initial offer.
Per share, the trio's indicative proposal was for 175 pence and 0.231 of a Kazakhmys share - worth 253 pence using Kazakhmys share levels at the time. It is now worth 238 pence per ENRC share.
ENRC is currently trading at around 219 pence, showing the market is also holding out little hope of an increase.
"The bidding consortium can exercise maximum leverage in the knowledge that, given the state of the company and current market conditions, should an offer not be tabled, the share price will likely come under significant selling pressure," Macquarie analysts said in a note.
KAZAKHMYS DECIDES?
A bid at current levels will prove difficult for both ENRC's independent board members and Kazakhmys, whose shares are being used as currency by the government, but which is also ENRC's top shareholder with a 26 percent stake - a hangover from a failed takeover attempt before the miner listed.
The independent directors have already said the current offer "materially undervalues" ENRC. But with the bidders holding almost 54 percent of the shares, there is little hope of an alternative, potentially forcing them to back an offer.
ENRC has a free float of just 18 percent, with 3 percent of that held by Russian metals tycoon Suleiman Kerimov.
Kazakhmys support is essential to any bid. Ultimately it will need to put any offer to its own shareholders but without at least tacit support for the mooted offer no bid is likely to be put forward at all, the sources said.
Kazakhmys, which has long sought to resolve the problem of its large stake in ENRC said last month it could back an offer. Sources familiar with the matter said then that it supported the structure of a cash-and-share proposal which, even at original levels, would mean almost $900 million of cash for Kazakhmys and 77 million of its own shares.
This at a time when the company is investing to boost production. It would also lift Kazakhmys's free float of readily tradeable shares, while removing the government as a key shareholder and the ENRC headache.
Kazakhmys, ENRC and representatives of both the bidding consortium and ENRC independent directors declined to comment.
(Reporting by Clara Ferreira-Marques; Additional reporting by Anjuli Davies; Editing by Elaine Hardcastle)
By Clara Ferreira-Marques
