Filed by Sherritt Coal Acquisition Inc.
Filed pursuant to Rules 165 and 425 promulgated under
the Securities Act of 1933, as amended
Subject Company: Fording Inc.
Subject company's Commission File No: 1-15230
FOR IMMEDIATE RELEASE
SHERRITT COAL PARTNERSHIP II FILES DETAILS OF ENHANCED OFFER
- SHERRITT AND TEACHERS' PARTNERSHIP OFFERS C$35.00 CASH OR ONE TRUST UNIT
PER FORDING SHARE, TO BE DELIVERED VIA AN EXCHANGE RIGHT
- THE PARTNERSHIP'S SUPERIOR OFFER ONLY AVAILABLE IF FORDING-TECK PROPOSAL
DEFEATED AT JANUARY 3RD SHAREHOLDER MEETING
TORONTO - DECEMBER 18, 2002- Sherritt International Corporation (Sherritt)
[TSX: S] and Ontario Teachers' Pension Plan (Teachers') announced that their
partnership, Sherritt Coal Partnership II (the Partnership), is today mailing
its Notice of Variation to Fording shareholders detailing its enhanced offer to
purchase all of the outstanding common shares of Fording Inc. (Fording) [TSX and
NYSE: FDG]. The enhanced offer will be available on regulatory websites.
Under the terms of this superior offer, Fording shareholders now have the option
to receive:
- C$35.00 cash per share to a maximum total cash consideration of
C$850 million; or
- one exchange right exchangeable into a unit in a new income trust
(Canadian Coal Trust), focused on metallurgical coal, to a maximum
consideration of approximately 42,405,000 exchange rights; or
- a combination of C$35.00 cash and exchange rights (subject to proration
because of the cash and exchange right maximums above).
If all Fording shareholders (other than Teachers') elect to receive cash, then
all shareholders will receive approximately C$17.63 in cash and 0.496 of an
exchange right per Fording share. If all shareholders elect to receive exchange
rights, then all shareholders will receive approximately C$6.13 in cash and
0.825 of an exchange right per share. Additionally, if all Fording shareholders
elect to receive exchange rights, upon the exchange of those rights into trust
units, unitholders will also receive a special cash distribution from the trust
of up to C$3.60 per unit (or up to C$3.00 per prorated Fording share.)
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"Our enhanced offer is clearly superior to the Fording-Teck plan of
arrangement," said Sherritt's Chairman Ian W. Delaney. "Not only are we offering
a higher cash value for Fording shares, but for those shareholders opting for
exchange rights, Canadian Coal Trust offers greater upside potential with less
risk than the Fording-Teck plan."
Mr. Delaney continued, "The combination of Sherritt's and Fording's
metallurgical coal assets creates a powerful income trust, well-positioned to
compete globally. We expect Canadian Coal Trust to achieve C$50 million of
annual cost savings. One-third of these savings are anticipated in 2003. When
all of the cost savings are realized, we expect annual distributable cash flow
to increase by approximately C$0.60 per unit, before the benefit of any
marketing or coal blending synergies.
"Our proposed trust will create greater synergies and will have a stronger
capital structure than the Fording-Teck proposed trust, offering more value to
unitholders," concluded Delaney.
Brian J. Gibson, Senior Vice-President of Global Active Equities for Teachers'
said, "We are targeting a first quarter 2003 distribution of C$1.05 per unit. In
addition, the Partnership will not receive any quarterly distribution in 2003
until other unitholders receive a distribution of C$1.05 per unit, subject to a
maximum subordination amount of C$11.25 million each calendar quarter. The
subordination feature reduces the risk for Fording shareholders electing to
receive exchange rights and demonstrates the confidence Sherritt and Teachers'
have in Canadian Coal Trust's ability to generate superior cash distributions.
The Fording-Teck plan does not offer any subordination feature."
Mr. Gibson added, "We also believe Fording shareholders will appreciate the
strong corporate governance features of our proposal including the independence
of the trustees of the Canadian Coal Trust."
The enhanced offer will be open for acceptance until 8:00 p.m., Toronto time, on
January 6, 2003, unless withdrawn or extended. IF THE FORDING-TECK COMBINATION
IS APPROVED BY FORDING SHAREHOLDERS AT THE SHAREHOLDER MEETING CURRENTLY
SCHEDULED FOR JANUARY 3, 2003, THIS ENHANCED OFFER WILL BE TERMINATED. The offer
is also conditional upon at least 66 2/3% of the outstanding shares of Fording
being validly deposited under the enhanced offer and not withdrawn at the expiry
date. The full terms and conditions of the offer are set forth in the Notice of
Variation which, along with related materials and an investor presentation, will
be posted on the Sherritt International website at www.sherritt.com.
Sherritt and Teachers' are committed to keeping shareholders fully informed
about their enhanced offer. Shareholders with questions about tendering their
shares are encouraged to contact our Information Agent Innisfree M&A
Incorporated, toll free at 1-877-750-5837 (English speakers), or 1-877-750-9499
(French speakers).
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Goldman, Sachs & Co., National Bank Financial Inc. and BMO Nesbitt Burns Inc.
have been retained to act as financial advisors to the Partnership. National
Bank Financial Inc. and BMO Nesbitt Burns Inc. have also been retained to serve
as the dealer managers for the superior offer and to solicit acceptances of the
superior offer in Canada and the United States. Peters & Co. Limited has been
retained as a strategic advisor to the Partnership. Innisfree M&A Incorporated
has been retained as Information Agent.
Sherritt International Corporation is a widely held, diversified Canadian
resource company that operates in Canada and internationally. Sherritt's 97.7
million restricted voting shares and C$600 million 6% convertible debentures
trade on the Toronto Stock Exchange under the symbols S and S.DB, respectively.
Teachers' is one of Canada's largest financial institutions and a member of the
Canadian Coalition for Good Governance with net assets as of June 30, 2002 of
C$68 billion. With a solid track record of investment in Canada and worldwide,
Teachers' has achieved an 11.7 percent average rate of return since its
investment program began in 1990. Teachers' invests to secure the retirement
income of approximately 154,000 elementary and secondary school teachers and
88,500 retired teachers and their families. The pension plan is co-sponsored by
the Ontario government and the plan members who are represented by the Ontario
Teachers' Federation.
THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING
STATEMENTS ARE NOT BASED ON HISTORICAL FACTS, BUT RATHER ON CURRENT EXPECTATIONS
AND PROJECTIONS ABOUT FUTURE EVENTS. THESE FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO RISKS AND UNCERTAINTIES. THESE RISKS AND UNCERTAINTIES COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FUTURE RESULTS EXPRESSED OR IMPLIED
BY THE FORWARD-LOOKING STATEMENTS.
THIS NEWS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY
JURISDICTION.
NOTICE TO INVESTORS
IN CONNECTION WITH THE SHERRITT PROPOSAL, SHERRITT COAL ACQUISITION INC. (AN
AFFILIATE OF SHERRITT COAL PARTNERSHIP II) FILED WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION A SCHEDULE 14D-1F/A, AND SHERRITT INTERNATIONAL CORPORATION
AND CANADIAN COAL TRUST FILED A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, EACH CONTAINING AN OFFER AND CIRCULAR RELATING TO THE SHERRITT
PROPOSAL. SECURITY HOLDERS ARE URGED TO READ THESE DOCUMENTS BECAUSE THEY
CONTAIN IMPORTANT INFORMATION. COPIES OF THESE DOCUMENTS AS WELL AS RELATED SEC
FILINGS MAY BE OBTAINED, FREE OF CHARGE, FROM THE SEC'S WEBSITE AT
www.sec.gov AS WELL AS FROM SHERRITT COAL ACQUISITION INC. BY DIRECTING A
REQUEST TO INVESTOR RELATIONS, 1133 YONGE STREET, TORONTO, ONTARIO, CANADA
M4T 2Y7, TELEPHONE (416) 934-7655.
For further information please contact Sherritt Coal Partnership II Investor
Relations:
Ernie Lalonde
(416) 934-7655