NEMI Announces Agreement to Sell Interest in Peace River Coal Limited Partnership
VANCOUVER, Aug. 17, 2011 /CNW/ --
VANCOUVER, Aug. 17, 2011 /CNW/ - NEMI Northern Energy and Mining Inc. [TSX: NNE.A] (the 'Company') has entered into an agreement (the 'Asset Purchase Agreement') with Anglo Coal Canada Limited ('Anglo American'), pursuant to which the Company has agreed, subject to customary
conditions, to sell all of the Company's 12.18% interest in the Peace
River Coal Limited Partnership ('PRC') (along with its interest in the PRC general partner and related
documents and property) to Anglo American for a cash purchase price
(the 'Purchase Price') of C$73 million. The Asset Purchase Agreement is subject to TSX and
shareholder approval. Currently, the Company has 54,941,635 common
shares outstanding (67,385,635 common shares assuming conversion of all
of the currently outstanding convertible debentures of the Company,
which have an aggregate principal amount of $10,499,000 and are
exercisable at $0.90) Shareholders holding an aggregate of 37,775,480
shares, representing 68.8% of the Company's outstanding shares
(including 7,934,500 shares, representing 14.4% which are held by
Company directors) have committed to vote in favour of the transaction.
The Company will call a special general meeting of shareholders (the 'Meeting') to be held on September 26, 2011 to obtain shareholder approval of
the proposed disposition of the Company's interest in PRC. As the
Asset Sale will constitute a sale of substantially all of the Company's
current assets, closing is conditional upon, among other things, the
approval by not less than two-thirds of the votes cast by shareholders
at the Meeting.
PRC is a partnership of the Company, Anglo American and Hillsborough
Resources Ltd. ('Hillsborough'), the holder of a 12.99% PRC interest. The Company understands that
Anglo American has also agreed to purchase Hillsborough's interest in
PRC and has represented under the Asset Purchase Agreement that the
pro-rata consideration paid to Hillsborough does not differ materially
from the Purchase Price to be paid to the Company.
Under the terms of the Asset Purchase Agreement, if the Company receives
a bona fide unsolicited offer for an alternative transaction involving
a business combination, sale or other disposition of the Company's
interest in PRC which would result in a transaction which is superior,
from a financial point of view, to the Company and its shareholders
than the Asset Sale (a 'Superior Proposal'), Anglo american will have the right, for a period of five business
days, to amend the Asset Purchase Agreement to match the Superior
Proposal. If Anglo American does not provide the Company with a
matching offer within the five business days allotted, the Company may
pay Anglo American a break fee of $3,000,000, terminate the Asset
Purchase Agreement and accept the Superior Proposal. If the requisite
shareholder approval for the Asset Sale is not obtained, Anglo American
may terminate the Asset Purchase Agreement and the Company will be
required to pay Anglo American a break fee of $1,000,000.
In connection with its review of the proposed Asset Sale, the board of
directors have commissioned an independent fairness opinion (the 'Fairness Opinion') prepared by Salman Partners Inc. in respect of the adequacy of the
Purchase Price proposed under the terms of the Asset Purchase
Agreement. Salman Partners Inc. has provided a verbal opinion to the
board of directors that the Asset Sale is fair from a financial point
of view to the Company's shareholders.
Having considered the opinions provided in the Fairness Opinion the
board and management are of the opinion that the Purchase Price
represents fair and adequate consideration for the Company's interest
in PRC. Accordingly, the board of directors have approved the Asset
Sale, subject to certain conditions including approval by the
shareholders of the Company.
Hillsborough completed a statutory plan of arrangement with Vitol Anker
International B.V. (the 'Hillsborough Arrangement') in December 2009. As disclosed in the Company's Annual Information
Form dated December 29, 2010, at the time of the Hillsborough
Arrangement, the Company held 1,360,500 common shares of Hillsborough
(the 'Dissent Shares'). The Company dissented in respect of the Hillsborough Arrangement
and commenced arbitration proceedings against Hillsborough in
connection with the Company's preferential purchase rights under the
PRC limited partnership agreement. The Company has agreed that, if
Hillsborough completes a sale of its interest in PRC to Anglo American,
the Company will release its claims against Hillsborough under the
arbitration proceedings, provided that the Company is paid a price of
$0.50 per Dissent Share due to it under the Hillsborough Arrangement.
This news release includes forward-looking statements that are subject
to risks and uncertainties. All statements within, other than
statements of historical fact, are to be considered forward looking.
Although the Company believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions, such
statements are not guarantees of future performance and actual results
or developments may differ materially from those in forward-looking
statements. Factors that could cause actual results to differ
materially from those in forward-looking statements include market
prices, continued availability of capital and financing, and general
economic, market or business conditions. There can be no assurances
that such statements will prove accurate and, therefore, readers are
advised to rely on their own evaluation of such uncertainties. We do
not assume any obligation to update any forward-looking statements.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2011/17/c4584.html
Michael Cooney
Chairman
NEMI Northern Energy & Mining Inc.
(T) (415) 339-8825