2007-07-03 04:30 PT - News Release
Mr. Donald Lindsay of Teck Cominco reports
TECK COMINCO MAKES FRIENDLY C$41 PER SHARE OFFER FOR AUR RESOURCES
Teck Cominco Ltd. will make a $4.1-billion cash and share offer to acquire all of the outstanding shares of Aur Resources Inc.
- Aur shareholders to receive $30.75 in cash and 0.2187 of a Teck Cominco Class B share per Aur common share at full pro-ration;
- Unanimously supported by Aur's board of directors;
- Acquisition of Aur will immediately add over 200 million pounds or 43 per cent to Teck Cominco's annual copper production and 136 per cent to copper reserves and resources, and is expected to add 342 million pounds or 72 per cent to annual copper production by 2010;
- Offer represents a premium of 29 per cent to the 20-day volume weighted average closing price and to the closing price of Aur shares as at June 29, 2007;
- Transaction is expected to be immediately accretive to Teck Cominco's earnings and cash flow per share.
Aur shareholders will receive $41.00 or 0.8749 of a Teck Class B subordinate voting share per Aur common share, subject to pro-ration. The maximum amount of cash to be paid by Teck Cominco is $3.1-billion and the maximum number of Teck Cominco Class B shares to be issued is approximately 22 million shares. At full pro-ration, Aur shareholders would receive $30.75 in cash and 0.2187 of a Teck Cominco Class B share per Aur common share. The offer represents a premium of 29 per cent based on the 20-day volume weighted average closing prices of Teck Cominco Class B shares and Aur common shares on the Toronto Stock Exchange, and 28 per cent based on the closing prices of Teck Cominco Class B shares and Aur common shares on the Toronto Stock Exchange as at June 29, 2007.
Teck Cominco president and chief executive officer, Donald R. Lindsay, said: "The acquisition of Aur Resources will immediately increase our cash flow and add substantially to our long-term growth in copper production. We are pleased to re-establish our operating presence in Chile and believe that this transaction will create significant value for Teck Cominco shareholders."
"The cash and share offer of $41 per Aur share made by Teck Cominco is an excellent offer which has been unanimously supported by an independent committee of and by our entire board of directors. The offer represents a substantial premium to Aur's share price, with the share component providing our shareholders the opportunity to participate in the future growth prospects of Teck Cominco on a tax-deferred basis," said Dr. Gill, president and chief executive officer of Aur. "I cannot think of a buyer better suited to managing Aur's assets going forward and I look forward to being a Teck Cominco shareholder for many years."
The acquisition of Aur Resources will enhance Teck Cominco's copper production and reserves:
- Annual copper production will grow immediately by over 200 million pounds -- an approximate 43-per-cent increase;
- Annual copper production by 2010 is expected to increase by 342 million pounds, or 72 per cent over 2007 pretransaction level;
- Copper reserves and resources will increase by 15 billion pounds or 136 per cent, of which eight billion pounds are in reserves.
Dr. Norman B. Keevil, Teck Cominco's chairman, said: "This transaction is consistent with Teck's continuing strategy of balance in building the company. It will add both current copper production and new copper operations under development, and the increase in our copper interests will help to balance our existing strength in zinc and coal."
Teck Cominco will finance the cash portion of the offer using its substantial cash resources. With the payment of today's dividend, Teck Cominco has returned more than $1-billion to shareholders in 2007, through dividends and the repurchase of 13.1 million Class B shares for $577-million pursuant to a normal course issuer bid.
Mr. Lindsay said: "Our offer presents an attractive opportunity for Aur's shareholders. They will receive a significant premium over the historical highest price for their shares while also benefiting from the opportunity to participate in a larger, broadly diversified company with a strong balance sheet, enhanced dividend yield and long-term growth potential."
Teck Cominco and Aur have entered into a support agreement which provides for, among other things, a non-solicitation covenant on the part of Aur, subject to customary "fiduciary out" provisions that entitle Aur to consider and accept a superior proposal, a right in favour of Teck Cominco to match any superior proposal and the payment to Teck Cominco of a termination payment of $140-million if the acquisition is not completed as a result of the superior proposal.
The board of directors of Aur, after consultation with its financial and legal advisers, has unanimously approved entering into the support agreement and recommends that Aur shareholders tender to Teck Cominco's offer. CIBC World Markets Inc., acting as financial adviser to Aur, has provided an opinion that such offer is fair, from a financial point of view, to Aur shareholders. Aur's legal advisers are Heenan Blaikie LLP.
Full details of the offer will be included in a formal offer and takeover bid circular to be mailed to Aur shareholders in accordance with applicable securities laws. Teck Cominco expects to mail the takeover bid documents to Aur shareholders on or before July 18. The offer will be open for acceptance for at least 35 days following the date of the mailing. The offer will be subject to the usual conditions including receipt of all necessary regulatory approvals, absence of material adverse changes and acceptance of the offer by Aur shareholders owning not less than 66-2/3 per cent of the Aur shares on a fully diluted basis. Once the 66-2/3-per-]cent acceptance level is met, Teck Cominco intends to take steps to acquire all the outstanding Aur shares. Teck Cominco intends to promptly make the necessary regulatory filings in respect of the offer with the appropriate authorities. Teck Cominco expects the offer to receive regulatory approval in the normal course. Teck Cominco's financial advisers are Merrill Lynch Canada Inc. Its legal advisers are Lang Michener LLP in Canada and Paul, Weiss, Rifkind, Wharton & Garrison LLP in the United States.
Investor and analyst conference call and webcast
The investment community is invited to participate in a conference call and webcast regarding the offer as follows:
- Tuesday, July 3, 2007, at 8:30 a.m. (EDT);
- Toll-free (North America): 1-866-223-7781;
- Local/international: +416-641-6117.
The live webcast can be accessed by visiting Teck's website and clicking on the event title under "webcasts." The conference call will be available for replay until Monday, July 31, 2007, by calling 1-800-408-3053 for North American callers and +416-695-5800 for international/local callers. Pass code: 3227886 (pound sign).
An archival webcast of the presentation will be available via the Internet by visiting Teck's website and clicking on the event title under "webcasts."
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