May 15 2007
Xstrata plc and LionOre Mining International Ltd. announced today that they have amended the terms of their previously announced support agreement in accordance with which Xstrata made an all-cash offer to acquire all of the issued and outstanding shares of LionOre (the "Offer") by increasing the consideration payable under the Offer from C$18.50 to C$25.00 in cash per LionOre share. The expiry time for the increased Xstrata Offer is midnight (Vancouver time) Friday 25 May 2007.
Xstrata's increased offer price represents an increase of approximately 35.1% over its original offer price and a premium of 16.3% over the C$21.50 price per share offered by OJSC MMC Norilsk Nickel ("Norilsk") in its unsolicited competing bid for LionOre. The increased Xstrata Offer values the total share capital of LionOre at approximately C$6.2 billion (US$5.6 billion) and provides C$872 million more cash to the LionOre shareholders than the Norilsk offer. Xstrata expects to mail a formal notice of variation to all LionOre shareholders today.
The Board of Directors of LionOre, after consultation with its financial and legal advisors, has unanimously approved entering into the amending agreement and recommends that LionOre shareholders tender to the increased Offer. JPMorgan, acting as financial advisor to the LionOre Board of Directors, has provided an opinion that the increased Offer is fair, from a financial point of view, to LionOre shareholders.
The Board of Directors of LionOre has also determined that the Norilsk offer is no longer a superior proposal for purposes of the support agreement between Xstrata and LionOre and accordingly recommends that LionOre shareholders reject the Norilsk offer.
In connection with the Offer, Xstrata has been notified that all of the LionOre shareholders, including certain directors and officers of LionOre, that entered into lock-up agreements with Xstrata have deposited or instructed to be deposited to the Offer their LionOre shares, representing approximately 19.5% of the outstanding LionOre shares.
Xstrata received notice on 14 May 2007 from the Canadian Minister of Industry that Xstrata's acquisition of LionOre has been approved by the Minister under the Investment Canada Act. Xstrata has also received all necessary approvals from European Union member states for its acquisition of LionOre. Xstrata’s Offer is now free to proceed with no further regulatory review in the EU, any EU member state, Australia or Canada.
Under the terms of the amending agreement, LionOre has agreed to pay a termination payment in the amount of C$305 million, payable to Xstrata if a competing offer is recommended by LionOre and in certain other events.
Xstrata believes that all conditions of the Offer will be satisfied on or about 25 May 2007, the expiry date for the Offer, in which case the LionOre shareholders would receive on or about 30 May 2007 a cash payment of C$25.00 per LionOre share, without the uncertainty and delay inherent in any offer by Norilsk.
All of the other terms and conditions of Xstrata's Offer described in its offer and offering circular dated 5 April 2007 remain unchanged. Xstrata will finance its increased Offer through committed credit facilities and cash on hand.