MMC Norilsk Nickel
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17 May 2007 г. | 11:36
Statement by Norilsk Nickel on the Announcement of an Increased Offer by Xstrata
OJSC MMC Norilsk Nickel has noted the announcement by Swiss-based Xstrata plc that it will increase its offer to Cdn$25.00 per common share for the shares of LionOre Mining International Ltd.
"We are surprised and disappointed that the announcement includes an unreasonably high break fee payable to Xstrata of approximately 4.9 percent of the bid's value, which is over Cdn$300 million and well above the previous 2.8% break fee," said Norilsk Nickel’s General Director, Denis Morozov. "This high level of break fee is clearly inconsistent with corporate governance trends aimed at encouraging a healthy bidding process to maximize shareholder value, and does not encourage a level playing field for all participants."
This negative commentary is related to the fact that a support agreement was signed between Xtrata and LionOre some time earlier reading that in case of appearance of the third company with a better proposal than Xtrata’s, LionOre is to pay the forfeit to the Swiss. Until the moment of Xtrata’s last proposal, this amount was lower than the one declared yesterday. Thus, in the opinion of Nornickel’s representatives in case the company makes another better proposal and Xtrata does not continue fighting for LionOre, “the compensation will be actually paid by the buyer”.
Norilsk Nickel has received the necessary clearances in relation to Canada’s Competition Act and continues to advance the regulatory approval process which is running according to schedule in all relevant jurisdictions including South Africa, Switzerland and Norway (outside the EU). Norilsk Nickel expects to receive the necessary approvals before the June 18 expiry date of its original offer.
Together with its financial and legal advisors, Norilsk Nickel is examining the information released yesterday in Xstrata’s announced offer and will evaluate its alternatives. It expects to announce shortly its next steps.
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