- Revised Offer Price is a 23% Premium to ArcelorMittal Bid
- Revised Offer is for 50.1% of Baffinland Shares, including those already held by Nunavut Iron
- Shareholders receive significant premium and benefit of continuing ownership in Baffinland with new management and majority owner
- Nunavut Iron proposes Baffinland distribute 2% gross revenue royalty interest in proven and probable reserves to minority shareholders
- Offer Extended to 7:00 p.m., December 30, 2010
TORONTO, CANADA, December 15, 2010 – Nunavut Iron Ore Acquisition Inc. (“Nunavut Iron”) announced today that it has increased its Offer to purchase Common Shares of Baffinland Iron Mines Corporation (“Baffinland”) from $0.80 to $1.35 in cash per Common Share and has extended its Offer until 7:00 p.m. (Toronto time) on December 30, 2010.
Nunavut Iron’s increased Offer price of $1.35 per Common Share represents a premium of approximately 23% to ArcelorMittal’s offer of $1.10 per Common Share.
Nunavut Iron has also decreased the maximum number of Common Shares to be taken up and paid for under the Offer to the number of Common Shares which, together with any Common Shares owned by Nunavut Iron and its affiliates, constitutes 50.1% of the Common Shares outstanding on an in-the-money fully diluted basis. To the knowledge of Nunavut Iron, as of December 15, 2010, this number would be 162,394,332 Common Shares, based on 393,389,284 in-the-money fully diluted Common Shares outstanding and the 34,693,700 Common Shares currently owned by Nunavut Iron and its affiliates.
The amended Offer remains subject to substantially the same conditions as the original Offer, other than (i) the inclusion of a condition that Baffinland deliver to Nunavut Iron, on or before December 24, a favourable title opinion from Lawson Lundell LLP, acceptable to Nunavut Iron, addressing the matters described in section 2.12 of the Support Agreement between Baffinland and ArcelorMittal S.A. (“ArcelorMittal”) dated November 8, 2010, in respect of the title and ownership interest of Baffinland in the mining leases and mineral claims forming part of the Mary River property, or Nunavut Iron is otherwise satisfied in respect of such title and ownership interest, and (ii) Nunavut Iron has waived the failure of condition (b) under Section 4 of the Offer which occurred as a result of the entering into of the support agreement between Baffinland and ArcelorMittal; however, such waiver is limited solely to the entering into of the support agreement, as constituted on the date thereof.
In connection with ArcelorMittal’s offer for the Common Shares of Baffinland and the support agreement between those two companies, shareholders holding approximately 25% of the Common Shares (on an in-the-money, fully diluted basis) have entered into lock-up agreements with ArcelorMittal. Pursuant to these lock-up agreements, those shareholders have agreed to tender their shares to ArcelorMittal’s offer and are not free to tender to another take-over bid except in certain circumstances relating to (i) the other take-over bid constituting a “Superior Proposal” within the meaning of the support agreement, (ii) Baffinland having complied with the terms of the support agreement, and (iii) the support agreement thereafter having been terminated. If the support agreement and the lock-up agreements remain in effect at the time that Nunavut Iron takes up the Common Shares tendered to its Offer, the locked-up shareholders would not be permitted to tender into the Nunavut Iron Offer. Accordingly, assuming all other shareholders of Baffinland tender all of their Common Shares (on an in-the-money, fully diluted basis) to Nunavut Iron’s Offer, the effective take-up rate on the deposited Common Shares would be approximately 62% .
Nunavut Iron remains committed to developing the Mary River property in phases with modest initial capital requirements and prudent use of leverage for the benefit of all stakeholders.
Upon Nunavut Iron’s successful acquisition of voting control of Baffinland, Nunavut Iron intends to exercise commercially reasonable efforts to cause Baffinland to distribute to each then existing shareholder of Baffinland, other than Nunavut Iron and its affiliates, in respect of each then outstanding Common Share held thereby, a direct or indirect interest in a 2% gross revenue royalty, or an approximate financial equivalent, on the sale of iron ore from 100% of the proven and probable reserves of Baffinland’s Mary River property as at the date hereof. The exact form and structure of this payment will be determined by the Board of Directors of Baffinland as soon as practicable after Nunavut Iron is able to appoint a majority of the Board of Directors of Baffinland and after a review of relevant information regarding Baffinland, applicable tax implications for Baffinland and shareholders, and other related matters.
“Nunavut Iron’s revised Offer provides Baffinland shareholders with the opportunity to realize a substantial premium on a significant portion of their investment immediately and to benefit from the development of the Mary River Project in the longer term,” said Bruce Walter, Chairman of Nunavut Iron. “We believe that the continuing ownership interest in Baffinland and the proposed royalty interests should generate significant additional returns to shareholders as Mary River is brought into production.”
Nunavut Iron also announced that it has today purchased 9,303,200 Common Shares of Baffinland through the facilities of the Toronto Stock Exchange, the Alpha Market and the Pure Trading Market. The highest price paid and the average price paid for the Common Shares purchased today was $1.25 and $1.1886 per Common Share, respectively. This is Nunavut Iron’s first purchase of Common Shares since Nunavut Iron commenced its Offer. Nunavut Iron, together with all persons acting jointly or in concert with it, now owns 34,693,700 Common Shares. Nunavut Iron acquired the Common Shares in furtherance of its Offer and its intention to acquire control of Baffinland. Nunavut Iron continues to reserve the right to acquire additional Common Shares, up to an aggregate of 5% of the outstanding Common Shares, based on the number of Common Shares outstanding at the time of the commencement of the Offer.
The notice of variation and extension in respect of the Offer will be mailed to registered holders of Baffinland Common Shares and Convertible Securities promptly and will be available on SEDAR at www.sedar.com.
ABOUT NUNAVUT IRON AND IRON ORE HOLDINGS, LP
Nunavut Iron was incorporated under the laws of Canada on August 27, 2010 and has not carried on any material business other than in connection with matters directly related to the Offer. Nunavut Iron is wholly owned by Iron Ore Holdings.
Iron Ore Holdings is a limited partnership formed under the laws of Delaware for the purpose of making the Offer. Iron Ore Holdings is owned by Bruce Walter, the Chairman of Nunavut Iron, Jowdat Waheed, the President and Chief Executive Officer of Nunavut Iron, and funds managed by The Energy & Minerals Group, which is providing the majority of the equity financing for the Offer. The Energy & Minerals Group is a private investment firm with a family of funds with over US$2 billion under management that invest in the energy and minerals sectors.
FOR MORE INFORMATION
SHAREHOLDERS OF BAFFINLAND IRON MINES CORPORATION
Kingsdale Shareholder Services Inc.
Toll Free 1-888-518-1562 (English or French)
Outside North America, Bankers and Brokers Call Collect 416-867-2272
Facsimile: 416-867-2271, Toll Free Facsimile 1-866-545-5580
or visit www.baffinlandoffer.com
Lute & Company