Equinox urges Lundin shareholders to reject tie-up

SYDNEY (Reuters) - Equinox Minerals EQN.AX urged on Tuesday shareholders in its takeover target Lundin Mining (LUN.TO) to reject a rival merger plan with Inmet Mining as its C$4.7 billion ($4.8 billion) offer is superior.

Lundin rejected the offer on Monday as inadequate and too risky, but did not mention nor say the deal was inferior to its planned tie-up with Inmet Mining (IMN.TO), which shareholders are due to vote on April 4.

Equinox played down the risk in the debt package it has lined up, saying no short-term payments of the bridge loan are required.

"Equinox remains committed to the offer, which represents superior value to Lundin shareholders and provides better long term prospects in contrast to the nil-premium merger with Inmet or Lundin continuing as an independent entity," it said in a statement.

Equinox offered a mix of C$8.10 in cash and 1.29 Equinox shares plus C$0.01 with the deal coming at a time when China is driving global demand for copper and pushing prices to record highs.

Under the friendly Inmet deal, the pair would join forces to form a major Canadian copper miner called Symterra with a market capitalization of C$9 billion. Shareholders of Inmet would own 52.6 percent of the new company and Lundin investors the rest.

Lundin had also questioned Equinox's production forecasts and whether Equinox would be able to finance the $3.2 billion in debt it plans to take on to fund the bid.

But Equinox said, "It continues to believe debt markets remain strong and that the bridge facility has also been structured to mitigate risks to shareholders in a downside scenario."

It added the debt package ensures that debt remained serviceable even in a lower copper price scenario.

Equinox shares ended 3.2 percent lower at A$5.17 in a flat Sydney market.

($1 = 0.985 Canadian Dollars)

(Reporting by Sonali Paul & Narayanan Somasundaram; Editing by Ed Davies)