Sherritt extends offer for Luscar

Luscar Coal Income Fund Trust (LUS.U-T) says it will postpone the implementation of a shareholders’ rights plan as the Sherritt Coal Partnership has extended its hostile takeover bid until April 17.

The extension gives Luscar more time to find an alternative to the partnership’s offer of $317 million, plus $600 million in debt. The offer was made Feb 20. Luscar says it does not adequately reflect the true value of the trust.

“We believe that obtaining the undertaking from Sherritt provides more time to conduct a proper process than would be available if the rights plan were challenged,” says Jack McMahon, Luscar’s chief executive officer.

Luscar has agreed to supply Sherritt with the lists of registered holders of its units and convertible debentures.

Sherritt Coal is a partnership between Sherritt International (S-T) and a subsidiary of the Ontario Teachers’ Pension Plan Board. The partners were to have mailed their offer for all of Luscar’s outstanding units and convertible debentures.

Under the offer, unit-holders have the choice of receiving either $3.50 per unit, all in cash, or $2.38 in cash plus 0.265 of a Sherritt International restricted voting share. Sherritt Coal will also offer to buy all of the outstanding convertible debentures of the fund.

The offer is conditional on the tendering of at least 66.33% of the units and debentures. On Feb. 20, it represented a 36% premium over the 30-day weighted average trading price of the units.