May 3 2007
OJSC MMC Norilsk Nickel today announced that it will make an all-cash offer to acquire all of the outstanding common shares of LionOre Mining International Ltd. at a price of Cdn$21.50 in cash per LionOre common share.
About the Offer
Norilsk Nickel will offer to purchase all of the issued and outstanding common shares of LionOre at a price of Cdn$21.50 in cash for each LionOre common share. Assuming that all common shares are tendered into the offer, total cash consideration of approximately Cdn$5.3 billion will be offered.
The cash offer represents a premium of approximately 22.9% over the closing price of Cdn$17.49 per LionOre common share on the Toronto Stock Exchange on March 23, 2007, the last trading day prior to the announcement of the intention of Xstrata Canada Acquisition Corp. (“Xstrata”), a wholly-owned subsidiary of Xstrata plc, to make an offer for the LionOre common shares. The Offer also represents a premium of approximately 16.2% over the Cdn$18.50 price per LionOre common share offered by Xstrata.
Norilsk Nickel’s General Director, Denis Morozov, said: “This is an exciting opportunity for Norilsk Nickel, which will bring together two companies with a strong strategic fit and will enhance our position amongst the largest diversified mining companies in the world. The combination of Norilsk Nickel and LionOre results in greater scale in key commodities, enhanced geographic diversification and an exciting pipeline of projects, supported by a long-life and low-cost production portfolio. Through this offer, we are able to provide LionOre shareholders an attractive opportunity to realize substantial gains. At the same time, we are pursuing a transaction that is accretive to Norilsk Nickel’s earnings and cash flow.”
Full details of the offer will be included in the formal offer circular and take-over bid documents that will be filed publicly and subsequently mailed to LionOre’s shareholders. Norilsk Nickel will request formally a list of LionOre’s shareholders later today and expects to mail the offer circular and take-over bid documents to LionOre’s shareholders promptly after receipt of the shareholders’ list.
Completion of the offer will be subject to a sufficient number of shares being tendered to the offer such that Norilsk Nickel would own at least 66⅔% of LionOre’s common shares, on a fully-diluted basis, following completion of the offer. The offer also will be conditional upon the receipt of all necessary regulatory approvals, no material adverse change at LionOre and certain other usual and customary conditions. Norilsk Nickel is committed to working closely with the relevant government authorities to ensure compliance with applicable regulatory requirements and is confident that necessary regulatory approvals will be granted in a timely manner.
The acquisition will be financed through a combination of existing cash resources and committed credit facilities. Norilsk Nickel has received financing commitments from BNP Paribas and Société Générale to arrange the acquisition financing package necessary to complete the proposed acquisition. Norilsk Nickel has delivered its proposal to LionOre’s Board of Directors and firmly believes it constitutes a “superior proposal” under the terms of the Support Agreement that LionOre entered into with Xstrata plc. Norilsk Nickel welcomes the opportunity to work with LionOre to achieve a successful outcome to this transaction.