OSC paves way for Falconbridge to buy back stock

Falconbridge Ltd. (TSE) wasted no time in getting in its final bid to Placer Dome (TSE) to buy back the 24.9% stake Placer holds in the big nickel company.

Having successfully obtained Ontario Securities Commission approval to make a buy-back offer for the Placer holdings, Falconbridge Chairman William James at presstime told The Northern Miner the company’s bid would be in Placer’s hands well before the 5 p.m. deadline on June 30.

He said though there was no certainty on it, Falconbridge could have received a decision from Placer on the bid as early as the following day.

Meanwhile Placer Dome’s senior vice-president corporate, John Hick, said he expected “more than one other bid” could be received by Placer before the 5 p.m. deadline, and that one of these could be from Noranda Inc. (TSE). “If I were Noranda, I would bid,” Hick said.

While Falconbridge got the green light from the OSC to proceed with its bid at hearings earlier in the week, a rival proposal by Noranda Inc. to make an offer for the Falconbridge block just to Placer Dome, and not to other shareholders, was thrown out by the Commission.

Noranda was told at the all-day hearing that a bid for the Falconbridge common shares held by Placer at a 15% premium to the average market price, would mean triggering of the Ontario Securities Act, and require Noranda to make an offer to all shareholders.

Although details of the Falconbridge final bid were not available at presstime, in general terms its original proposal involved payment of a special cash dividend to all shareholders, purchase of the shares and warrants owned by Placer Dome, and acquisition of McIntyre Mines from Placer Dome.

Also involved would be a special non-cash dividend for minority shareholders, consisting (as revealed at the OSC hearings) of shares in a private company named Falconbridge Gold. A company spokesman told The Northern Miner this company includes the Hoyle Pond, and Owl Creek gold mines in the Timmins area, which Falconbridge inherited with its purchase of Kidd Creek.

In 1988, the two mines are expected to turn out about 83,000 oz gold. Some months ago, Falconbridge had declared its interest in selling the two mines, valued at around $300 million, but there has since been no indication of progress in that direction.

At the OSC hearings, financial advisers Merrill Lynch Canada Inc. and Scotia McLeod Inc. both told the commission that the Falconbridge proposal to buy back the Placer Dome stake represented fair value for shareholders, and the combination of the special dividend, the gold shares and the continued holding shareholders would have in Falconbridge was at least equal to the cash payout to be made to Placer Dome.

The two advisers indicated that a special cash dividend in the range of $4 a share would be paid before Falconbridge buys the fully-diluted Falconbridge shares from Placer Dome, at a price of about $26.50.