TIDMEGU
RNS Number : 2169U
European Goldfields Ltd
19 December 2011
Suite 200, Financial Plaza
204 Lambert Street
Whitehorse, Yukon
Canada Y1A 3T2
For Immediate Release
EUROPEAN GOLDFIELDS RECOMMENDS C$2.5 BILLION FRIENDLY
ACQUISITION BY ELDORADO GOLD
19 December 2011 - European Goldfields Limited (AIM: EGU / TSX:
EGU) ("European Goldfields") is pleased to announce that it has
signed an agreement with Eldorado Gold Corporation ("Eldorado")
under which Eldorado proposes to acquire all of the issued and
outstanding shares of European Goldfields via a plan of arrangement
("the Arrangement") under the Yukon Business Corporations Act.
Consideration for the transaction will be Eldorado shares, with
European Goldfields shareholders offered 0.85 Eldorado shares and
C$0.0001 in cash for each European Goldfields share they own. The
transaction values European Goldfields at approximately C$2.5
billion, based on the closing price of Eldorado on the TSX on
December 16, 2011.
The European Goldfields Directors unanimously recommend that
European Goldfields shareholders vote in favour of the proposed
Arrangement, and each Director intends to vote all of the European
Goldfields shares they own or control at the date of the
Arrangement meeting in favour of the Arrangement, in the absence of
a superior proposal.
Key Attributes of the Transaction
-- Secures an immediate premium for European Goldfields shareholders which compares favourably to recent precedent gold transactions.
-- Opportunity for sustainable re-valuation, driven by growth
potential, transaction rationale and management track record.
-- Potential to enhance and accelerate the development of
European Goldfields' projects through a dedicated Eldorado team
with a track record of successfully permitting, developing and
operating mines.
-- Provides European Goldfields shareholders with continued exposure to European Goldfields' current portfolio while diversifying European Goldfields from existing "single region" risk through exposure to Eldorado's geographically diversified portfolio of producing low cost mines and near-term development projects worldwide, including providing immediate exposure to material gold production.
-- Creates a combination with exposure in growth regions,
including in the Aegean region, China and South America.
-- Substantial increase in combined reserve base, with European
Goldfields contributing its 9.2 million gold ounces to the
entity.
-- Creates a combined position as one of the lowest cost,
highest growth global gold producers, with increased liquidity and
a broader investor and analyst following.
-- Combined current gold production of 650,000 ounces, growing
to over 1.5 million ounces by 2015 through project pipeline and
expansion opportunities.
-- Provides increased leverage to record near term gold prices
with no hedge program and exposure to Eldorado's gold price-linked
dividend policy.
The exchange ratio of 0.85 Eldorado shares for each European
Goldfields share represents a value of C$13.08 per share based upon
the closing price of Eldorado on the TSX on December 16, 2011 of
C$15.39.
This represents a premium of:
-- 48.4% based on both companies' TSX closing share prices on
December 5, 2011, the last dealing day before European Goldfields
announced it had received preliminary approaches; and
-- 56.5% based on both companies' 20-day TSX volume weighted average prices ending on December 5, 2011.
The exchange ratio also implies:
-- a value of C$14.78 per share based on Eldorado's TSX closing
share prices on December 5, 2011, the last dealing day before
European Goldfields announced it had received preliminary
approaches; and
-- a value of C$15.60 based on Eldorado's 20-day TSX volume weighted average prices ending on December 5, 2011.
Mr. Martyn Konig, Executive Chairman & President of European
Goldfields, added, "Today's transaction offers excellent value to
shareholders through an immediate premium, reduced execution risk,
and future upside through participation in Eldorado, a leading gold
growth story with a world-class asset portfolio and a compelling
dividend policy. In addition, this is good news for Greece as
Eldorado has the experience, local operating knowledge and track
record to develop our assets in Greece efficiently and safely,
supporting employment and contributing to the economic recovery of
the country. After reviewing a number of proposals, with maximising
shareholder value as a primary objective, the Board unanimously
recommends shareholders vote in favour of the proposed
transaction."
Mr. Paul N. Wright, President & CEO of Eldorado, stated, "We
are extremely pleased to have reached this mutually beneficial
transaction with European Goldfields. Integration of European
Goldfields' business with our own will provide Eldorado with the
dominant gold mining business in the Aegean Region and the combined
business will constitute the leading low cost, high growth
intermediate gold producer globally. We are particularly pleased to
be partnering with Aktor SA, Greece's largest construction company,
to help ensure effective, safe and timely development of our
operations in Greece."
Summary of the transaction
On December 18, 2011, European Goldfields and Eldorado entered
into an arrangement agreement setting out, among other things, the
terms under which the proposed business combination transaction
will be undertaken. Under the transaction, each common share of
European Goldfields will be exchanged for 0.85 Eldorado common
shares. Each outstanding option of European Goldfields shall be
exchanged for options of Eldorado that will entitle the holder to
receive, upon the exercise thereof, Eldorado shares based upon the
Exchange Ratio and otherwise on the same terms and conditions as in
the original European Goldfields option. Pursuant to the
transaction, Eldorado expects to issue approximately 156 million
common shares. Following the completion of the transaction, the
current Eldorado shareholders will hold approximately 78% of the
combined company, while current shareholders of European Goldfields
will hold approximately 22%, on a fully diluted basis.
The transaction will be carried out by way of a court-approved
plan of arrangement and will require the approval of at least 66
2/3% of the votes cast by the shareholders of European Goldfields
at a special meeting of European Goldfields shareholders expected
to take place in mid-February 2012. It is expected that the
transaction will be exempt from the registration requirements of
the U.S. Securities Act of 1993, as amended, pursuant to the court
approval exemption afforded by section 3(a)(10) under that Act. The
transaction is also subject to obtaining the approval of a majority
of the votes cast by the shareholders of Eldorado at a special
meeting of Eldorado shareholders expected to take place on the same
date as the European Goldfields meeting. In addition to shareholder
and court approvals, the transaction is subject to applicable
regulatory approvals and the satisfaction of certain other closing
conditions customary in transactions of this nature.
The Boards of Directors of each of European Goldfields and
Eldorado have unanimously approved the transaction and are expected
to provide written recommendations that holders of European
Goldfields common shares and Eldorado common shares vote in favour
of the transaction in the information circulars to be mailed in
connection with their respective special meetings of shareholders.
The financial advisors for European Goldfields, BMO Capital Markets
and Lazard & Co., Limited, have provided opinions to the
European Goldfields Special Committee and Board of Directors that,
as of the date of such opinions and subject to the assumptions,
limitations, and qualifications stated in such opinions, the
consideration to be received by the European Goldfields
shareholders under the transaction is fair, from a financial point
of view, to the European Goldfields shareholders. Eldorado's
financial advisors, GMP Securities L.P. and BoA Merrill Lynch, each
provided fairness opinions to the Eldorado Board of Directors that
the consideration to be paid by Eldorado under the transaction is
fair, from a financial point of view, to Eldorado. European
Goldfields' legal counsel is Stikeman Elliott LLP and Eldorado's
legal counsel is Borden Ladner Gervais LLP.
Each of the directors and senior officers of Eldorado and
European Goldfields have entered into voting support agreements and
have agreed to vote in favour of the transaction.
The arrangement agreement provides that the Boards of Directors
of each of European Goldfields and Eldorado may, under certain
circumstances, terminate the agreement in favour of an unsolicited
superior proposal, subject to payment of a termination payment of
C$75 million, in the case of Eldorado, and C$75 million, in the
case of European Goldfields, or an expense fee of up to C$30
million upon the occurrence of certain other termination events,
and subject to a right by Eldorado to match the superior proposal
in question.
Further information regarding the transaction will be contained
in an information circular that each of European Goldfields and
Eldorado will prepare, file and mail in due course to their
respective shareholders in connection with the special meetings of
each of the Eldorado and European Goldfields shareholders to be
held to consider the transaction. All shareholders are urged to
read the information circulars once they become available as they
will contain additional important information concerning the
transaction.
Details regarding these and other terms of the transaction are
set out in the arrangement agreement, which is available on SEDAR
at www.sedar.com.
Qatar Holding Financing Transaction
European Goldfields intends to adjourn the Special Meeting of
Shareholders scheduled for 22 December 2011, which was called to
approve the financing transaction with Qatar Holding (the
"Financing") until after the Eldorado and European Goldfields
shareholders vote on the Arrangement.
Conference Call
In connection with this news release, European Goldfields and
Eldorado will hold separate conference calls and audio webcasts on
December 19th, 2011 at 8 a.m. GMT and at 10 a.m. Eastern Time
respectively, both of which will be followed by a
question-and-answer session. Presentations to accompany these calls
will be available on the respective websites 15 minutes in advance
of each call. To access the calls, please dial:
European Goldfields - 8am GMT
Canada & USA Toll Free: 1866 223 0481
Callers from the UK: +44 (0)1452 54 10 77
Passcode: 37523496
Replay (available up to 14 days after the call):
North American toll-free: 1866 247 4222
Callers from the UK: +44 (0) 1452 55 00 00
Replay passcode: 37523496
Eldorado - 10am Eastern Time
Local and international: (416) 340-2216
North American toll-free: (866) 226-1792
Replay (available up to 14 days after the call):
Local and international: (905) 694-9447
North American toll-free: (800) 408-3053
Replay passcode: 2138217
The audio webcasts for each company will be archived on our
respective websites at www.egoldfields.com and
www.eldoradogold.com.
An interview with Tim Morgan-Wynne, Executive Vice-President and
Chief Financial Officer of European Goldfields, regarding the
transaction is available at www.egoldfields.com.
About European Goldfields
European Goldfields is a developer-producer with globally
significant gold reserves located within the European Union. The
Company generates cash flow from its 95% owned Stratoni operation,
a high grade lead/zinc/silver mine in North-Eastern Greece.
European Goldfields is expected to evolve through development of
its project pipeline of gold and base metal deposits at Skouries
and Olympias in Greece and Certej in Romania. The Company plans
future growth through development of its highly prospective
exploration portfolio in Greece, Romania and Turkey.
Enquiries:
European Goldfields Liberum Capital Limited
Steve Sharpe, SVP Business Development Michael Rawlinson
e-mail: info@egoldfields.com Tom Fyson
Tel: +44 (0)20 7408 9534 Tel: +44 (0)20 3100 2000
Brunswick
Carole Cable / Fiona Micallef-Eynaud
e-mail: egoldfields@brunswickgroup.com
Tel: +44 (0)20 7404 5959
Lazard & Co., Ltd BMO Capital Markets
Spiro Youakim Egizio Bianchini
Chris Seherr-Thoss Gary Mattan
Tel: +44 (0)20 7187 2000 Tel: +1 (0) 416 359 4001
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements made herein may contain
forward-looking statements or information under applicable Canadian
securities laws. Forward-looking statements or information herein
include, but are not limited, to statements or information with
respect to: (i) European Goldfields' agreement with Eldorado and
the anticipated benefits; (ii) the combined company's expected
growth profile; (iii) the anticipated market capitalization of the
combined company; (iv) the combined company's access to financing;
(v) the value and payment of the combined company's dividends; (vi)
the combined company being the dominant gold mining business in the
Aegean region; (vii) the profitability of the combined company; and
(viii) the completion of the Arrangement.
Forward-looking statements and forward-looking information by
their nature are based on assumptions and involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements or information. We have made certain assumptions about
the forward-looking statements and information, including,
assumptions about the price of commodities, the estimated reserve,
resources and production of the combined entity and the impact on
the integration of the business on our operations and financial
position. Even though our management believes that the assumptions
made and the expectations represented by such statements or
information are reasonable, there can be no assurance that the
forward-looking statement or information will prove to be accurate.
Furthermore, should one or more of the risks, uncertainties or
other factors materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in forward-looking statements or information. These risks,
uncertainties and other factors include, among others, the
following: the ability to conclude a transaction, commodity price
volatility; discrepancies between actual and estimated production,
mineral reserves and resources and metallurgical recoveries; mining
operational and development risk; business integration risks;
litigation risks; regulatory restrictions, including environmental
regulatory restrictions and liability; risks of sovereign
investment; currency fluctuations; speculative nature of gold
exploration; global economic climate; dilution; share price
volatility; competition; loss of key employees; additional funding
requirements; and defective title to mineral claims or property.
For a more detailed discussion of such risks and material factors
or assumptions underlying these forward-looking statements, see the
Company's Annual Information Form for the year ended 31 December
2010, filed on SEDAR at www.sedar.com. There can be no assurance
that forward-looking statements or information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
you should not place undue reliance on the forward-looking
statements or information contained herein. The Company does not
intend, and does not assume any obligation, to update or revise any
forward-looking statements whether as a result of new information,
future events or otherwise, except as required by law.
For further information please see the Company's website at
www.egoldfields.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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