Nunavut Iron Ore Acquisition Inc. plans to ask the Ontario
Securities Commission Monday for a hearing on the shareholder
rights plan announced over the weekend by the board of directors of
Baffinland Iron Mines Corporation (BIMGF, BIM.T), which it said
would end the auction process under which it is attempting to
acquire the Toronto-based miner.
Baffinland announced late Saturday that its board had accepted
an improved, all-cash, friendly offer from ArcelorMittal (MT,
MT.AE), the world's largest steel producer. It also adopted a new
shareholder rights plan, its second since Nunavut first launched
its hostile take-over bid, and raised its break-fee to C$15.5
million from C$11 million.
Nunavut said the rights plan was adopted to favor the offer for
Baffinland from ArcelorMittal and would deny shareholders the right
to accept its superior offer. Baffinland said Saturday that
Luxembourg-based ArcelorMittal had raised its bid to C$1.25 a share
from its original bid of C$1.10, ArcelorMittal's amended offer
comes two days after Nunavut increased its hostile all-cash bid to
C$1.35 a share from 80 Canadian cents. Nunavut, which has already
acquired just over 15 million shares under its bid, is a wholly
owned subsidiary of Iron Ore Holdings LP (IRNHF, IOH.AU) and is
backed by the Energy Minerals Group, a U.S. private equity
firm.
"The adoption of this rights plan is intended to be an
auction-ending move by the Baffinland board and is not in the best
interests of its shareholders," Bruce Walter, Nunavut's chairman,
said in a statement Sunday. "Unless set aside, the poison pill will
prevent shareholders from considering Nunavut Iron's current offer
or any increased offer. This action is particularly offensive for
shareholders when it is clear many in the market have indicated
that Nunavut Iron's Offer already delivers greater value than the
modest increase to its offer proposed by ArcelorMittal."
Walter also said Baffinland shareholders should be "appalled" by
the larger break fee, saying that in effect, the Baffinland board
"is using funds that belong to the shareholders in an effort to
prevent shareholders from choosing Nunavut Iron's superior
offer."
Nunavut also noted that Baffinland's board adopted the new
shareholders' rights plan just four weeks after the Ontario
Securities Commission cease traded Baffinland's prior shareholders'
rights plan on the basis that it was hindering the ongoing contest
between Nunavut and ArcelorMittal.
As reported, ArcelorMittal already has a significant iron-ore
presence in Canada and is in the process of expanding its iron ore
output to become more self sufficient. Baffinland, meanwhile, wants
a strategic partner to help develop its Mary River iron-ore project
on Canada's Baffin Island in Nunavut.
-By Monica Gutschi, monica.gutschi@dowjones.com,
416-306-2017