MT Arcelor Mittal New

European steelmaking giant ArcelorMittal (MT.FR) said Monday it was responding to Nunavut Iron Ore Acquisition Inc.'s recent allegations regarding what ArcelorMittal termed an improved, financially superior offer for Baffinland Iron Mines Corp. (BIM.T).

MAIN FACTS:

-ArcelorMittal said its improved offer of C$1.25 in cash per common share provides superior value and certainty for the shareholders of Baffinland.

-ArcelorMittal said its offer is for 100% of Baffinland's shares while Nunavut's offer, which it termed coercive, is a partial bid for only 50.1% of Baffinland's common shares including those shares already owned by Nunavut.

-The Nunavut offer is coercive because it forces Baffinland shareholders to decide whether to accept or reject such offer without knowing the price at which the shares not taken up would trade should the current offer by Nunavut be completed, ArcelorMittal said.

-It added that Nunavut's offer leaves shareholders with the prospect of being left with thinly traded minority common shares that would unlikely reflect the full value of Baffinland's assets.

-Nunavut's offer leaves shareholders with the prospect of being left with thinly traded minority common shares that would unlikely reflect the full value of Baffinland's assets, ArcelorMittal said.

-Assuming all of Baffinland's common shares, other than those locked-up with ArcelorMittal and those owned by Nunavut, are tendered to Nunavut's offer, Baffinland's shareholders would receive C$1.35 in cash for approximately 62% of their holdings and would end up continuing to hold the remaining 38% of their tendered shares, ArcelorMittal added.

-It said that for Baffinland shareholders to realize the equivalent value offered by the C$1.25 ArcelorMittal offer, the remaining minority common shares held by tendering shareholders would have to trade at or above C$1.09 per share, versus an unaffected price for Baffinland's common shares of C$0.56 prior to the initial unsolicited offer by Nunavut on Sept. 22.

-The economic value of the coercive partial offer by Nunavut is substantially less than the ArcelorMittal Offer and is highly uncertain as it is dependent on an unspecified royalty structure and project development plan, ArcelorMittal said.

-Under the current offer by Nunavut, Baffinland shareholders face continued execution and financing risk with the potential for significant equity dilution. If the Nunavut offer were successful, these risks could materially and adversely affect the value of the remaining minority common shares, it added.

-Baffinland has agreed to adopt a new shareholder rights plan in order to protect Baffinland's shareholders from being coerced into tendering into Nunavut's inferior partial offer and in order to guard against tactics by Nunavut that seek to coerce shareholders. Adopting a new rights plan ensures that Baffinland shareholders can take advantage of the superior ArcelorMittal Offer, ArcelorMittal said.

-The increased break fee payable under the ArcelorMittal Offer reflects Baffinland's board of directors' support for the certainty and value that the ArcelorMittal offer provides to Baffinland shareholders. ArcelorMittal's Offer for all common shares represents an increase of $0.15 per share, or almost $60 million, more than its original bid, ArcelorMittal said.

-ArcelorMittal has received all of the required regulatory approvals for its offer and is uniquely positioned to provide the technical expertise and financial capacity to evaluate, manage and overcome the infrastructure challenges associated with the Mary River project, a project vital to Baffinland's future success, ArcelorMittal said in its statement.

- By Paris Bureau, Dow Jones Newswires; +331-4017-1740; art.mooradian@dowjones.com

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