Severstal Resources Announces results of Take Over bid
Through its mining division Severstal Resources, OAO Severstal announced that the offer by 7027940 Canada Limited, an affiliate of Severstal, to purchase the outstanding common shares of PBS Coals Limited (formerly, Penfold Capital Acquisition Corporation)(TSX: PBS) expired at 11:59 p.m. on October 24, 2008.
In order to resolve outstanding matters between PBS Coals Limited and the Offeror, the principal shareholders of PBS Coals Limited and Mincorp Acquisition Corp’s management shareholders have agreed to an aggregate reduction of the proceeds payable to them of US$300 million. The offer price of C$8.30 per share offered to shareholders other than the principal shareholders remains unchanged. The principal shareholders represent approximately 80% of the outstanding shares of PBS Coals Limited and include institutional, individual shareholders, each member of the board of directors of PBS Coals Limited and each member of management who is a shareholder of Mincorp Acquisition Corp.
All of the conditions to the Offer, including the minimum tender condition, which required at least 66 2/3% of the common shares being validly deposited and not withdrawn at the expiry time, have been satisfied or waived. Approximately 140,650,905 common shares of PBS Coals Limited, which represents approximately 95% of the outstanding shares of PBS Coals Limited (calculated on a fully-diluted basis), have been tendered and not withdrawn pursuant to the Offer. The Offeror intends to take-up the shares deposited under the Offer as soon as practicable and in any event has agreed to by the close of business on November 3rd, 2008.
As agreed with PBS Coals Limited, payment to shareholders who deposited their shares to the Offer will be made as soon as practicable and in any event by the close of business on November 5th, 2008 (subject to regulatory approval).
The Offeror intends to acquire all shares not tendered to the Offer pursuant to a compulsory acquisition transaction under the Canada Business Corporations Act. Upon successful completion of such acquisition, the Offeror intends to de-list the shares of PBS Coals Limited from the Toronto Stock Exchange.
PBS is engaged in the mining, processing and sale of metallurgical and thermal coal in Somerset County, Pennsylvania, U.S. PBS’s operations are located in the Northern Appalachian Coal Fields, situated between Severstal’s North American production centres, and have the capacity to produce over 4 million tonnes of metallurgical coal.
PBS’s portfolio includes six underground and six surface mining operations. In the fiscal year ended March 31, 2008, PBS produced approximately 2.4 million clean tonnes of coal, including 1.5 million clean tonnes of coking coal. PBS has 133.5 million tonnes of in-place coal reserves and 228.3 million tonnes of in-place coal resources. In addition to its significant reserves, PBS has an experienced management team and a competitive cost position among international coal producers.
Through its acquisition of PBS, Severstal expects to create value for its shareholders through benefits from the vertical integration of its upstream operations; the increase in self-sufficiency with regard to the supply of primary raw materials available to its North American operations will allow Severstal to control its operating costs. PBS’s central location will also mitigate transportation costs between Severstal’s facilities.
About Severstal Resources:
Severstal Resources is a leading feedstock supplier in Russia to the iron-and-steel industry which manages the mining assets of Severstal. Severstal Resources incorporates the Karelsky Okatysh and Olcon iron ore complexes and Vorkutaugol, a coal mining complex. Stalmag, a niobium production facility is also part of Severstal Resources. In 2007, these operations produced 7.6 million tonnes of coking-coal, 1.8 million tonnes of steam coal, 10 million tonnes of iron-ore pellets and 4.7 million tonnes of iron-ore concentrate. In 2007, Severstal Resources established a gold business segment, which totalled 5.3 tonnes of gold output over the past year.
In May, 2008 Severstal Resources reached an agreement to purchase up to a 61.5% stake in African Iron Ore Group Ltd, which owns the exploration rights for an iron ore deposit in the Putu Range area of Liberia, West Africa.
About Severstal:
OAO Severstal is an international steel producer with a listing on the Russian Trading System and the London Stock Exchange. Incorporated in 1993, the company focuses on high value added and unique niche products and has a successful track record of acquiring and integrating high-quality assets in North America and Europe. Severstal owns mining assets in Russia, thus securing its supplies of raw materials. In 2007, Severstal produced 17.5 million tonnes of steel with revenues of US$15.2 billion, EBITDA of US$3.7 billion and earnings per share of US$1.92.
