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
SHERRITT COAL PARTNERSHIP II
SHERRITT COAL PARTNERSHIP II EXTENDS THE DATE OF EXPIRY OF ITS SUPERIOR OFFER
FOR FORDING TO JANUARY 23, 2003 AFTER ALBERTA COURT OF QUEEN'S BENCH ORDERS
FORDING INC. TO MOVE ITS PLAN OF ARRANGEMENT MEETING TO JANUARY 22, 2003
TORONTO - DECEMBER 23, 2002. Sherritt Coal Partnership II (the Partnership), a
partnership of Sherritt International Corporation (Sherritt) (TSX: S) and the
Ontario Teachers' Pension Plan (Teachers'), today announced that it will extend
the expiry date of its offer for all of the shares of Fording Inc., (Fording)
(TSX and NYSE: FDG), to 8:00 p.m. (Toronto time) January 23, 2003. Sherritt and
Teachers' superior offer was made on December 18, 2002 by way of Notice of
Variation to their original offer mailed to Fording shareholders on October 25,
2002.
"We have presented Fording shareholders with a proposal clearly superior to
the Fording-Teck plan of arrangement," said Sherritt's Chairman Ian W. Delaney.
"We are offering a higher cash value for the Fording shares, and for those
shareholders opting for exchange rights, the Canadian Coal Trust we are offering
will be a new trust that will provide greater upside potential with less risk
than the Fording-Teck plan. The details of the trust are fully disclosed in our
December 18 Notice of Variation." He went on to say, "Both the Fording-Teck plan
of arrangement and our offer are lengthy and complex proposals that require
sufficient time for evaluation. We strongly believe that the greater economic
value of our proposal will be clear in the minds of Fording's shareholders. We
have every confidence that our offer is superior to the Fording-Teck plan of
arrangement and we invite Fording shareholders to consider it alongside the
Fording-Teck plan. The Alberta Court of Queen's Bench has ordered Fording to
move its plan of arrangement meeting to January 22, 2003, and therefore, we have
made a business decision to extend the expiry date for consideration of our
offer to January 23, 2003."
Under the terms of Sherritt and Teachers' superior offer, Fording
shareholders 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 (the
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).
SHERRITT COAL PARTNERSHIP II
If all Fording shareholders (other than Teachers') elect to receive cash,
then 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.)
The funding of any such special cash distribution will be drawn from the
C$300 million bridge facility provided by an affiliate of an investment banking
firm and several Canadian chartered banks to Sherritt Coal Acquisition Inc. C$90
million of this facility will be used to pay the break fees agreed to by
Fording, Teck and Westshore, and to repay a portion of Fording's existing debt
and hedging obligations. The remaining C$210 million will be used to either pay
Fording shareholders cash to purchase a portion of the shares tendered under the
offer, or to the extent that there is a high proportion of Fording shareholders
who elect to receive exchange rights as opposed to cash (in the range of
approximately 70% to 82.5% exchange rights election), then upon the exchange of
exchange rights into trust units, the remaining funds will be distributed to
unitholders of the Canadian Coal Trust and to the Sherritt Coal Partnership II
on a basis that reflects their pro rata interests in Sherritt Coal Acquisition
Inc. The special cash distribution will total C$210 million, approximately equal
to C$3.60 per trust unit, if the Fording shareholders choose to receive exchange
rights for their shares to the maximum allowed under the offer (82.5% exchange
rights election level). In this instance, approximately C$177 million will be
paid to the Canadian Coal Trust unitholders and the remaining C$33 million will
go to Sherritt Coal Partnership II to reflect its 15.6% ownership of Sherritt
Coal Acquisition Inc. In instances of lower levels of exchange rights election
by Fording shareholders, the per unit amounts distributed to unitholders as well
as the payments to the Sherritt Coal Partnership II, will decrease. The
unitholders of the Canadian Coal Trust and Sherritt Coal Partnership II will
always receive their respective share of any special cash distribution based
strictly upon their ownership interests in Sherritt Coal Acquisition Inc., which
will be determined by the cash and exchange rights elections of the Fording
shareholders.
Brian J. Gibson, Senior Vice-President of Global Active Equities for
Teachers' said, "The plan of arrangement proposed by Fording Inc. is a
court-mediated process that is governed by the Alberta Court of Queen's Bench.
In contrast, our offer to purchase all of the outstanding shares of Fording Inc.
is governed by the takeover bid provisions of Canadian securities laws. The
original January 6 expiry date of our offer fully complied with the appropriate
takeover bid rules. That date was chosen to enable the Fording shareholders to
consider our superior proposal in the same time frame as was previously
established by Fording for consideration of their plan of arrangement."
Gibson continued, "The issue of short notice to shareholders has arisen
primarily because of the time frame chosen by Fording in bringing forward a
substantially different plan to its shareholders, including a change of control,
than the "management bid" that Fording had originally proposed through
self-conversion to an income trust. The ruling on Friday by Mr. Justice
LoVecchio of the Alberta Court of Queen's Bench supports the
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SHERRITT COAL PARTNERSHIP II
rights of all Fording shareholders. The ruling has required Fording's board of
directors to do the right thing by extending their record date to December 19,
2002 and their meeting date to January 22, 2003. We are happy to have our offer
considered in the same time frame, so we are voluntarily moving the date of
expiry of our superior offer to January 23, 2003."
The superior offer from Sherritt and Teachers' will only be available to
Fording shareholders if the Fording-Teck plan of arrangement is not approved.
Voting AGAINST the Fording-Teck plan of arrangement will preserve Fording
shareholders' opportunity to receive greater value from the Partnership's
superior offer. Teachers', which holds approximately 6.2% of the outstanding
shares of Fording, has indicated that it will vote AGAINST the Fording-Teck plan
of arrangement. To defeat the special resolution approving the plan of
arrangement, more than 33 1/3% of votes cast at the special meeting by
shareholders present in person or by proxy must vote AGAINST.
For full details about the Partnership's offer, Fording shareholders are
encouraged to read the enhanced offer materials that were mailed December 18,
2002. These materials and an investor presentation describing the superior offer
are posted on the Sherritt International website (www.sherritt.com).
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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.
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SHERRITT COAL PARTNERSHIP II
THIS NEWS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY
JURISDICTION.
NOTE TO INVESTORS
In connection with the proposed business combination, Sherritt Coal
Acquisition Inc. (wholly-owned by Sherritt Coal Partnership II) has filed with
the U.S. Securities and Exchange Commission a Schedule 14D-1F/A, and Sherritt
International Corporation and Canadian Coal Trust have filed a registration
statement under the Securities Act of 1933, each containing an Offer and
Circular relating to the proposed business combination described in this
release. Security holders are urged to read these documents because they contain
important information about Sherritt Coal Acquisition Inc., Sherritt
International Corporation, Canadian Coal Trust, Fording Inc. and the proposed
business combination. Copies of the 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
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