CALGARY, ALBERTA (TSX: FDG.UN) (NYSE: FDG) today announced that
it has entered into an agreement to sell all of its assets to Teck
Cominco Limited ("Teck Cominco") by way of a plan of arrangement
(the "Transaction"), pursuant to which Fording unitholders will
receive $93.76 per unit payable in a combination of US$82.00 cash
and 0.245 of a Teck Cominco Class B subordinate voting share ("Teck
Cominco Shares") per Fording unit. "We are pleased to be able to
present Fording unitholders with this opportunity to realize
enhanced value from their investment," said Michael Grandin, the
Chair of the Independent Committee of the Fording Trustees. It is
expected that the Fording unitholder meeting to consider the
Transaction will occur in late September 2008 and that the
Transaction will be completed in late October 2008.
The US$82.00 per unit cash payment, which includes a final
distribution of US$3.00 per unit, and Teck Cominco Shares (the
"Unit Proceeds") equate to $14.1 billion. This represents a value
of US$91.66 per unit or $93.76 per unit ("Unit Value"), based on
the closing trading price of the Teck Cominco Shares of $40.41 and
an exchange rate of US$0.978/C$1.00 in each case on July 28,
2008.
The Unit Value represents a premium of 17% to the weighted
average trading price of the Fording units on the Toronto Stock
Exchange during the twenty trading days ending Monday, July 28,
2008. Fording's units closed at $83.80 on the Toronto Stock
Exchange on Monday, July 28, 2008. The weighted average trading
price of the Teck Cominco Shares on the TSX for the twenty trading
days ending Monday, July 28, 2008 was $41.90.
For Fording, the sale is the culmination of an extensive review
of strategic alternatives by the Independent Committee of the
Trustees of Fording and the Independent Committee of the Directors
of Fording (GP) ULC, a wholly owned subsidiary of Fording. The
Independent Committees have, among other things, conducted a global
search for potential purchasers of Fording. Negotiations with Teck
Cominco were directed by the Independent Committees and led by Mr.
Grandin. The Independent Committees have unanimously recommended
that the Fording Trustees and the Fording Directors support the
transaction. The Fording Trustees and Fording Directors (excluding
those that are not independent of Teck Cominco and who abstained
from voting) have unanimously approved the Transaction. The Fording
Trustees and Fording Directors were advised verbally by RBC Capital
Markets, the advisor to the Independent Committees, that the
consideration to be received by unitholders under the Transaction
is fair from a financial point of view to Fording unitholders
(other than Teck Cominco and any related parties of Teck
Cominco).
Mr. Grandin stated, "Our review of strategic alternatives
included an examination of a variety of options including a
possible sale of Fording or its assets. During that process, the
Independent Committees reviewed expressions of interest and
concluded that the Teck Cominco offer represents the best
alternative for Fording unitholders. While our sale process
attracted interest from numerous companies involved in the global
mining and steel industries, certain issues, such as our corporate
structure and our non-operating 60% interest in the Elk Valley Coal
Partnership, presented challenges to some potential acquirors.
Consolidation of the ownership of Elk Valley Coal is a logical
step, particularly in light of recent strength in metallurgical
coal prices, as well as the need to address our income trust
structure before 2011."
Teck Cominco currently holds approximately 19.9% of the units of
Fording and is the Managing Partner of the Elk Valley Coal
Partnership, the metallurgical coal business from which Fording
receives substantially all of its cash flow. Because Teck Cominco
is considered a related party, the Independent Committees retained
National Bank Financial Inc. ("National Bank") as an Independent
Valuator to perform a formal valuation of the Fording Units.
National Bank concluded that the value of the Fording units was
within a range from $79.00 to $99.00.
Teck Cominco and Fording have entered into an arrangement
agreement which provides for, among other things, a
non-solicitation covenant by Fording, subject to customary
provisions that entitles Fording to consider and accept a superior
proposal, a right in favour of Teck Cominco to match any superior
proposal, and the payment by Fording to Teck Cominco of a
termination payment of US$400 million if the Transaction is not
completed as a result of the superior proposal and in certain other
circumstances. Teck Cominco will also assume any residual
liabilities of Fording. The Fording units will be delisted from the
TSX and NYSE upon completion of the Transaction.
The Transaction is subject to a number of conditions, including
obtaining both the approval of two-thirds of unitholders voting at
the meeting and a simple majority of unitholders voting at the
meeting (other than Teck Cominco and any related party of Teck
Cominco). The Transaction is also subject to court approval as a
plan of arrangement, listing approval from the TSX and NYSE in
respect of the Teck Cominco Shares to be distributed to
unitholders, regulatory approvals in certain jurisdictions and a
number of other customary conditions. Teck Cominco has agreed to
pay up to $10 million in transaction costs if the Transaction is
not approved by Fording's unitholders and in certain other
circumstances.
Teck Cominco has entered into a debt commitment letter with a
syndicate of banks to borrow US$9.8 billion to finance a portion of
the Transaction. The Transaction is subject to the availability to
Teck Cominco of such financing at closing. Teck Cominco has also
advised it intends to sell its 29.5 million Fording units
subsequent to the Fording unitholder meeting and utilize the net
proceeds to fund a portion of the Transaction.
The Transaction is structured as a sale of assets by Fording and
a subsequent distribution to Fording unitholders of the Unit
Proceeds. As a result, unitholders who are residents of Canada will
be allocated income from Fording for tax purposes (in an amount
substantially equal to the value of the Unit Proceeds) which will
be taxed as ordinary income, rather than being taxed as a capital
gain. Unitholders who are not resident in Canada will be subject to
Canadian withholding tax at source on the full amount of the Unit
Proceeds.
Fording's unitholders are urged to consult their tax advisors
and read carefully the tax disclosure section of the Information
Circular relating to the Transaction when it is available. Canadian
unitholders who are taxable and hold their Fording units as a
capital investment will generally receive capital gain or loss
treatment on any sale of their units in the public markets and
therefore may prefer to sell their units in the public markets
prior to the completion of the Transaction. Non-Resident
unitholders may also prefer to sell their units in the public
markets prior to the completion of the Transaction.
It is currently anticipated that the Fording unitholder meeting
to consider the Transaction will occur in late September 2008 and
that the closing of the Transaction will occur in late October
2008. Further, the closing of the Transaction will occur
approximately 20 trading days after Fording and Teck Cominco
publicly announce that the conditions to closing have been
satisfied (including court, unitholder and regulatory approvals).
Unitholders will therefore have time to decide whether to sell
their units in the public markets prior to completion of the
Transaction or receive the Unit Proceeds on closing. No further
regular quarterly distributions will be made if the Transaction is
completed.
The Independent Committees have retained RBC Capital Markets as
financial advisor and Osler, Hoskin & Harcourt LLP as its
Canadian and U.S. legal counsel.
About Fording
Fording Canadian Coal Trust is an open-ended mutual fund trust
and one of the largest royalty trusts in Canada. Fording holds a
60% interest in the metallurgical coal operations of the Elk Valley
Coal Partnership. The Elk Valley Coal Partnership is the world's
second largest exporter of seaborne metallurgical coal, supplying
high-quality coal products to the international steel industry.
Fording's Units are traded on the Toronto Stock Exchange under the
symbol FDG.UN and on the New York Stock Exchange under the symbol
FDG.
Investor and Analyst Conference Call and Webcast
Teck Cominco has organized a conference call and webcast
regarding the Transaction as follows:
Tuesday, July 29, 2008, at 8:45 a.m. (EDT)
Toll Free (North America): 1-866-696-5910
Local/International: +416-340-2217
The live webcast can be accessed by visiting Teck Cominco's
website at www.teckcominco.com and clicking on the event title
under "Webcasts" or by accessing http://www.marketwire.com.
According to Teck Cominco, the conference call will be available
for replay until Thursday, August 28, 2008, by calling
1-800-408-3053 for North American callers and +416-695-5800 for
international/local callers. Passcode: 3267832#.
Forward-Looking Information Advisory
This press release contains forward-looking information within
the meaning of the United States Private Securities Litigation
Reform Act of 1995, and the Ontario Securities Act relating, but
not limited to, Fording's expectations, intentions, plans and
beliefs. Forward-looking information can often be identified by
forward-looking or similar words suggesting future outcomes, or
other expectations, beliefs, plans, objectives, assumptions,
intentions or statements about future events or performance.
Unitholders are cautioned not to place undue reliance on
forward-looking information. By its nature, forward-looking
information involves numerous assumptions, known and unknown risks
and uncertainties, of both a general and specific nature, that
could cause actual results to differ materially from those
suggested by the forward-looking information or contribute to the
possibility that predictions, forecasts or projections will prove
to be materially inaccurate.
These risks include that the parties will not proceed with the
Transaction, that the terms of the Transaction as implemented will
vary from those currently contemplated, that the Transaction will
not be successfully contemplated for any reason including the
failure to obtain required unitholder approval, that the Teck
Cominco debt financing contemplated by debt commitment letter will
not be available at closing, failure to obtain court approval or
inability to obtain clearance from regulatory authorities. Fording
cautions that the list of risks and assumptions set forth or
referred to above is not exhaustive. Some of the risks,
uncertainties and other factors which negatively affect the
reliability of forward-looking information are discussed in
Fording's public filings with the Canadian and United States
securities regulatory authorities, including its most recent
management information circular, annual report, management's
discussion and analysis, quarterly reports, material change reports
and new releases. Fording's public filings are available through
Fording's website at www.fording.ca. Copies of Fording's Canadian
public filings are available on SEDAR at www.sedar.com. Fording's
public filings in the United States, including Fording's most
recent annual report on form 40-F, as supplemented by its filings
on form 6-K, are available at www.sec.gov. Fording further cautions
that information contained on, or accessible through, these
websites is current only as of the date of such information and may
be superseded by subsequent events or filings. Fording undertakes
no obligation to update publicly or otherwise revise any
information, including any forward-looking information, whether as
a result of new information, future events or other such factors
that affect this information except as required by law.
Contacts: Fording Canadian Coal Trust Colin Petryk Director,
Investor Relations (403) 260-9823 Email: investors@fording.ca
Website: www.fording.ca
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