NEWS RELEASE
XSTRATA ANNOUNCES FRIENDLY C$18.50 PER SHARE CASH OFFER FOR LIONORE
Highlights:
· Cash Offer of C$18.50 per share
· Premium of 16.5% to the 30-day volume weighted average price
· Unanimously recommended by LionOre Board of Directors
· Irrevocable lock-up agreements from shareholders representing approximately 19% of the outstanding LionOre shares
· Represents a cash premium at a time of record high nickel prices
· Consolidates Xstrata Nickel’s position as a top-tier nickel producer with a global reach
· Creates value for Xstrata Nickel through vertical integration and combination of complementary businesses
Toronto
and Zug, March 26 2007
Xstrata plc (LSE: XTA.L,
ZSE: XTA.S) ("Xstrata") and LionOre
Mining International Ltd. (TSX/ASX: LIM, LSE: LOR, BSE:) ("LionOre")
announced today that they have entered into a support agreement for an all-cash
offer to acquire all of the issued and outstanding shares of LionOre by way of
a friendly take-over bid (the "Offer"). The Offer is for C$18.50 per
share, valuing the transaction at approximately C$4.6 billion (US$4.0
billion). The Offer represents a 5.8% premium over the closing
price of C$17.49 per LionOre share on the Toronto Stock Exchange (the “TSX”) on
March 23, 2007 and a 16.5% premium over the volume weighted
average price of the LionOre shares over the last 30 trading days on the TSX.
The support agreement
between Xstrata and LionOre provides for, among other things, a
non-solicitation covenant on the part of LionOre, subject to customary
"fiduciary out" provisions that entitle LionOre to consider and
accept a superior proposal, a right in favour of Xstrata to match any superior
proposal and the payment to Xstrata of a termination payment of approximately
C$130
million, if the acquisition is not completed as a result
of the superior proposal.
In connection with the
Offer, certain shareholders including directors and officers of LionOre have
entered into irrevocable lock-up agreements with Xstrata pursuant to which they
have agreed to deposit all of their LionOre shares under the Offer, subject to
certain exceptions, representing approximately 19% of the
issued and outstanding LionOre shares.
The Board of Directors
of LionOre, after consultation with its financial and legal advisors, has
unanimously approved entering into the support agreement and recommends that
LionOre shareholders tender to the Offer. JP Morgan, acting as financial
advisor to the LionOre Board, has provided an opinion that the Offer is fair,
from a financial point of view, to LionOre shareholders.
The Offer represents the culmination of a strategic review
process by the LionOre Board to maximize value for its shareholders. The
Offer, in the view of the LionOre Board, represents the most attractive and
certain value for LionOre shareholders. Xstrata
Nickel has undertaken extensive and detailed due diligence to ensure that
LionOre operations, projects and upside potential are understood and reflected
in the Offer.
Successful completion
of the transaction will strengthen Xstrata’s position as a significant
participant in the nickel industry, and ensure that the growth potential in the
LionOre portfolio can be optimized through its combination with Xstrata
Nickel’s downstream processing facilities. Xstrata Nickel will also increase
its degree of vertical integration and gain geographic and technical
diversification across its operations.
The Offer documents
are expected to be mailed by April 6, 2007. The Offer will be open for
acceptance for a period of not less than 35 days and will be conditional upon,
among other things, valid acceptances of the Offer by LionOre shareholders
owning not less than 66 2/3% of the LionOre shares on a fully-diluted basis.
In addition, the Offer will be subject to certain customary conditions, relevant
regulatory approvals including in Canada,
Australia and South Africa,
the absence of a material adverse change with respect to LionOre, and a waiver
of the LionOre shareholder rights plan implemented by the LionOre Board as it
may pertain to the Offer. Once the 66 2/3% acceptance level is met, Xstrata
intends to take steps available to it under relevant securities laws to acquire
any outstanding LionOre shares. Xstrata may waive the
conditions of the Offer in certain circumstances.
Colin Steyn, President and CEO of LionOre said, “We are
very pleased to support this Offer. The bid offers clear value to shareholders,
and also positions our operations and employees as part of a growing,
successful global nickel producer. This is an extremely attractive opportunity
for our shareholders to lock in the substantial growth in value they have seen
recently in their investment. To realize cash at this point in the commodity
cycle eliminates the risk that our shareholders would remain exposed to as a
stand-alone group, and enables them to realize value for their investment at a
time of historically high nickel prices.”
Ian Pearce, CEO of
Xstrata Nickel, noted, “The combination of LionOre with Xstrata Nickel brings
together two very complementary businesses and creates significant opportunity
for the enlarged Xstrata Nickel business. This is an important step in our
strategy to grow Xstrata Nickel into a truly global nickel business. With
LionOre, we unleash opportunities to create value through additional production,
strong synergy potential, access to new markets and increased opportunities for
growth, and through optimization of technology. There is a unique industrial
logic in the combination of these two businesses which is recognized in the
price being offered to LionOre shareholders.”
The acquisition of the
LionOre shares will be financed through Xstrata's existing credit facilities
and cash on hand.
Mr. Steyn, President and CEO of LionOre, has been a
director of LionOre since 1998 and was appointed President and Chief Executive
Officer in 1999. Mr. Ted Mayers, Chief Financial Officer, has been a director
of LionOre since 1997 and was appointed Chief Financial Officer in 2002. Mr.
Steyn and Mr. Mayers are key individuals important to LionOre.
The book value of the gross assets of LionOre as at
December 31, 2006, was US$1.72 billion. In the 12 months ended December 31,
2006, LionOre recorded operating earnings of US$533.3 million and net earnings
of US$428.5 million.
Subject to the provisions of the support agreement between
Xstrata, Xstrata Canada Acquisition Corp.
(the “Offeror”) and LionOre, the Offer will be made by the Offeror, a
wholly-owned indirect subsidiary of Xstrata.
Macquarie Bank Limited
and TD Securities Inc. are acting as financial advisors and Davies Ward
Phillips & Vineberg LLP and Freshfields Bruckhaus Deringer are acting as
legal counsel to Xstrata. JP Morgan is acting as financial advisor and McCarthy
Tetrault LLP is acting as legal counsel to LionOre.
North
American Investment Market Call
A conference call with
senior management of Xstrata Nickel and LionOre for the North American
investment community has been scheduled for March 26, 2007 at 9:00
a.m. Toronto time / 2:00 p.m. UK (BST). Members of the investment community may
participate by dialing 1-800-379-4140 within North America and 416-641-6677
outside of North America. The live audio-cast
will be available from www.xstrata.com and available as an archive from
Xstrata's website and LionOre’s website (www.lionore.com) following the event.
Media
Conference
A media conference
with Ian Pearce, CEO of Xstrata Nickel, and Colin Steyn, CEO of LionOre, will
be held today, March 26, 2007 at 10:30 a.m. Toronto time / 3:30 p.m. UK (BST)
at the TSX Gallery at 130 King Street West, Toronto. Media representatives who
are unable to attend may participate by dialing 1-800-354-6885 within North
America and 416-641-6652 outside of North America.
About
Xstrata
Xstrata is a major
global diversified mining group, listed on the London and Swiss stock exchanges.
Xstrata is headquartered in Zug, Switzerland and maintains a meaningful
position in seven major international commodity markets: copper, coking coal,
thermal coal, ferrochrome, nickel, vanadium and zinc, with a smaller but profitable
aluminium business, recycling facilities, additional exposures to gold, lead,
cobalt and silver and a suite of global technologies, many of which are
industry leaders. The Xstrata Group's operations and projects span 18
countries: Argentina, Australia, Brazil,
Canada, Chile, Colombia,
the Dominican Republic, Germany, Jamaica,
New Caledonia, Norway,
Papua New Guinea, Peru, South Africa,
Spain, Tanzania, the USA
and the UK.
Xstrata Nickel, headquartered in Toronto, Canada,
is one of Xstrata Group’s global commodity businesses, comprising five mines
and processing facilities in Ontario and Quebec, Canada;
a ferronickel mine and processing facility in Bonao,
Dominican Republic; and a
refinery in Kristiansand, Norway. Xstrata Nickel has a
significant portfolio of growth projects, including Nickel Rim South in Canada, Kabanga in Tanzania,
and Koniambo in New Caledonia.
Xstrata Nickel is the world’s fourth largest nickel producer, with annual
managed production of more than 110,000 tonnes of refined nickel.
About
LionOre
LionOre is an
international nickel and gold producer with mining operations located in Australia, Botswana
and South Africa.
LionOre's nickel production is supported by significant by-product credits in
the form of copper, cobalt, platinum group metals and gold. LionOre also owns
the proprietary Activox® technology for the hydrometallurgical treatment of
metal concentrates. The LionOre shares are listed on the Toronto,
Australian, London and Botswana stock
exchanges.
Legal Notice
This announcement is
for informational purposes only and
does not constitute or form part of any offer or invitation to purchase,
otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any
solicitation of any offer to sell, otherwise dispose of, issue, purchase,
otherwise acquire or subscribe for, any security. The Offer (as the same may
be varied or extended in accordance with applicable law) will be made
exclusively by means of, and subject to the terms and conditions set out in,
the offer and offering circular document to be delivered to LionOre and filed
with Canadian provincial securities regulators and to be mailed to LionOre
shareholders by Xstrata and the Offeror. LionOre shareholders should read
these materials carefully because they contain important information,
including the terms and conditions of the Offer.
The release,
publication or distribution of this announcement in certain jurisdictions may
be restricted by law and therefore persons in such jurisdictions into which
this announcement is released, published or distributed should inform themselves about and observe such
restrictions.
Each of Macquarie Bank
Limited and TD Securities Inc. is acting exclusively for Xstrata and no one
else in connection with the Offer and will not be responsible to anyone other
than Xstrata for providing the protections afforded to its clients or for
providing advice in relation to the Offer and/or any other matter referred to
in this announcement.
No statement in this
announcement is intended as a profit forecast and no statement in this
announcement should be interpreted to mean that earnings per Xstrata ordinary
share for the current or future financial years would necessarily match or
exceed the historical published earnings per Xstrata ordinary share.
Neither the content of
Xstrata’s website, LionOre’s website or any other website nor the content of
any website accessible from hyperlinks on Xstrata’s website, LionOre’s website
or any other website is incorporated into, or forms part of, this announcement.
Forward-Looking Statements
This document contains statements which are, or may be
deemed to be, "forward‑looking statements" which are prospective in
nature. Forward-looking statements are not based on historical facts, but
rather on current expectations and projections about future events, and are
therefore subject to risks and uncertainties which could cause actual results
to differ materially from the future results expressed or implied by the
forward-looking statements. Often, but not always, forward-looking statements
can be identified by the use of forward-looking words such as
"plans", "expects" or "does not expect", "is
expected", "budget", "scheduled",
"estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or statements
that certain actions, events or results "may", "could",
"should", "would", "might" or "will" be
taken, occur or be achieved. Such statements are qualified in their entirety by
the inherent risks and uncertainties surrounding future expectations. Such
forward‑looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of Xstrata to be materially different from any future results, performance or
achievements expressed or implied by the forward‑looking statements. Important
factors that could cause actual results, performance or achievements of Xstrata
to differ materially from the expectations of Xstrata include, among other
things, general business and economic conditions globally, commodity price
volatility, industry trends, competition, changes in government and other
regulation, including in relation to the environment, health and safety and
taxation, labor relations and work stoppages, changes in political and economic
stability, the failure to meet certain conditions of the Offer and/or the
failure to obtain the required approvals or clearances from regulatory and
other agencies and bodies on a timely basis or at all, the inability to
successfully integrate LionOre's operations and programs with those of Xstrata,
incurring and/or experiencing unanticipated costs and/or delays or difficulties
relating to integration of LionOre, disruptions in business operations due to
reorganization activities and interest rate and currency fluctuations. Such
forward-looking statements should therefore be construed in light of such
factors.
Other than in accordance with its legal or regulatory
obligations (including under the UK Listing Rules and the Disclosure and
Transparency Rules of the Financial Services Authority), Xstrata is not under
any obligation and Xstrata expressly disclaims any intention or obligation to update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For further information, please contact:
Xstrata
Contacts
Ian Hamilton
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Claire Divver
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Telephone
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+ 1 416 982 7161
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Telephone
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+44 20 7968 2871
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Mobile
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+ 1 416 902 0986
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Mobile
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+44 7785 964 340
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Email
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ihamilton@xstratanickel.ca
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Email
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cdivver@xstrata.com
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www.xstrata.com
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LionOre
Contacts
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Paul Lockstone
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Freda Colbourne
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Telephone
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+44 20 7344 1325
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Telephone
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+ 1 416 979 1120
x.262
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Mobile
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+44 7876 586 200
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Mobile
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+ 1 416 560 7794
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Email
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Freda.colbourne@edelman.com
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www.lionore.com
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