DIAMOND FIELDS RESOURCES INC.
|April 3, 1996
|TSE listed- DFR|
Vancouver, B.C. - Robert M. Friedland and Jean Raymond Boulle, Co-Chairman of Diamond Fields Resources Inc. (``DFR'') announced today that DFR's board of directors has unanimously resolved to accept and recommend to shareholders the offer by Inco Limited (``Inco'') pursuant to which all of the common shares of DFR other than those beneficially owned by Inco would be exchanged for a combination of cash and securities of Inco. Inco and DFR have now executed definitive agreements relating to the proposed transaction.
Under the terms of the agreement, each DFR share would be exchanged for 0.557 Inco common shares or $26.39 in cash, or a combination thereof, 0.091 of an Inco 5.5% Convertible Redeemable Preferred Share Series E, and 0.25 of an Inco Class VBN Share, subject to a maximum of $350 million in cash and a stated maximum for all non-share consideration. In addition, each DFR share would be exchanged for a note exchangeable for one share of a subsidiary company which will hold DFR's diamond assets.
Each Series E Preferred Share would carry one vote on all matters, have a liquidation value of U.S. $50 per share, be entitled to annual fixed cumulative dividends of 5.5% payable in U.S. or Canadian dollars, be redeemable by Inco after five years, with mandatory redemption at par in 10 years, and be convertible at any time into Inco common shares at a conversion price of U.S. $41.85.
The Class VBN Shares are designed to reflect a 25% interest in the financial performance of the Voisey's Bay project and all future discoveries in Labrador and on DFR's existing exploration properties in Norway and Greenland. Each Class VBN Share would carry one vote on all matters, be non-convertible by Inco for ten years, and be convertible at the option of the holder in certain circumstances into Inco common shares. In addition, each Class VBN Share would be entitled immediately and for a 10 year period to minimum dividends in an amount equal to 80% of dividends paid on an Inco common share. Class VBN Share dividends will rank pari pasu with Inco common share dividends. Inco's dividend policy during such 10 year period will be to pay dividends on Class VBN Shares in an amount equal to the greater of the minimum rate of 80% of regular dividends paid on Inco common shares or 25% of the adjusted net income of the Voisey's Bay project. Inco has committed to exploration expenditures at the Voisey's Bay project and in Diamond Fields properties in Greenland and Norway in an amount of at least Cdn. $80 million, in the aggregate, over the five years following the proposed Inco-DFR merger. DFR shareholders (through their ownership of Class VBN Shares) would have the right to elect 2 representatives on the board of directors of Inco. The Inco board would be expanded accordingly.
DFR's financial advisors, CS First Boston and Nesbitt Burns, have provided their preliminary views that the merger proposal from Inco is fair to DFR shareholders from a financial point of view. Based on the analyses provided by DFR's financial advisors and pre- announced share prices, the DFR board of directors believes this offer is valued at approximately $4.3 billion for the shares of DFR not already owned by Inco (valuing 100% of DFR at approximately $4.6 billion).
Under the terms of the Inco Agreement, DFR has agreed not to solicit competing bids or other proposals. DFR's board of directors does, however, have the right to respond to unsolicited bids or proposals and complete alternative transactions which it deems to be in the best interests of the DFR shareholders.
DFR has agreed to pay to Inco a fee of $115 million, plus reimbursement (to a maximum of $15 million) for actual expenses incurred by Inco in the event that a third party acquires control of DFR or takes up shares of DFR pursuant to a takeover bid made within the next five months for less than all of the shares of DFR.
DFR has granted to Inco the right, exercisable only in the event of the commencement of an unsolicited takeover bid for less than all of the shares of DFR by a party other than Inco, to purchase DFR common shares, either by way of open market purchases or from treasury or a combination of both, in any such case at prevailing market prices, at an aggregate cost not exceeding Cdn. $350 million. It is antcipated that Inco would be entitled to acquire approximately 8% of the DFR common shares pursuant to such right. Inco would have full voting rights in respect of any such newly acquired shares notwithstanding Inco's existing voting agreement granting voting rights to Robert Friedland. If, and to the extent that, Inco exercises such right, the cash component of Inco's offer would be reduced accordingly.
Inco has the right to withdraw its offer unless, prior to April 15, 1996, Mssrs. Friedland and Boulle shall have entered into agreements committing them to support the merger with Inco.
It is anticipated that the exchange of DFR shares for securities of Inco would be tax-deferred for most shareholders in Canada and the United States.
The DFR-Inco transaction, which is proposed to be effected as a DFR plan of arrangement, is subject to various closing conditions, including DFR shareholder, British Columbia court and various regulatory approvals and confirmation of financial advisors' fairness opinions. The transaction is also subject to Inco shareholder approval.
Pursuant to the terms of its existing arrangement agreement (the ``February Agreement'') with Falconbridge Limited (``Falconbridge''), DFR will today provide Falconbridge with documentation relating to the Inco offer, and Falconbridge will have the right to increase the consideration contemplated by February Agreement in accordance with the procedure defined therein.
The DFR board of directors unanimously determined to accept the Inco offer after receiving and reviewing the revised offer from Falconbridge which was publicly announced on April 2, 1996. Based in part upon discussions with its financial and legal advisors, the DFR board determined that the Inco offer is superior to the revised Falconbridge offer, and accordingly resolved not to accept the latter. Moreover, the DFR Board noted that the revised Falconbridge offer was expressed to be conditional upon the approval by DFR of a sale from Falconbridge to Inco of a further 25% interest in Voisey's Bay Nickel Company Limited, the entity through which DFR and Inco own their respective interests in the Voisey's Bay mineral deposit, and other changes to the ownership, governance and operations of that company. The DFR board considered this request for its approval with the assistance of its advisors, and unanimously determined that to grant the approval would be contrary to the best interests of DFR and its shareholders. Accordingly, the DFR board unanimously resolved not to grant the requested approval.
For further information, please call,
Cliff Carson, President & Director
Edward L. Mercaldo, Executive Vice President, CFO & Director