To bolster its defence against a $1.6-billion takeover bid by the Sherritt Coal Partnership II, Fording (FDG-T) has announced plans to offer shareholders a $3-per-share cash bonus as part of its proposed conversion to an income trust.
Fording says the cash, which will accompany one trust unit for each share tendered, will help shareholders pay any taxes associated with the conversion.
Fording intends to details its conversion plan later this month, and will put it to a shareholder vote slated for Dec. 20. Shareholders of record on Nov. 19 will be entitled to vote.
In part to cover the cost of the cash sweetener, Fording has negotiated $425 million worth of replacement credit with RBC Capital Markets. On Nov. 5, 2002, Fording had more than 50.6 million issued and outstanding shares.
Fording maintains that its plan to convert to an income trust is best and that it will, “unlock value for shareholders, provide a continued platform for growth, and maintain both a sound and flexible financial position.”
Fording, Canada’s largest export-coal producer continues to recommend that shareholders reject the Sherritt Partnership’s $29-per-share offer, which was launched on Oct. 21. The Partnership is an alliance between Sherritt International (S-T) and the Ontario Teachers’ Pension Plan. The pair hope to merge Fording’s assets with those of Luscar Coal, which they took over last year, and create an income trust of their own.
The Partnership’s offer expires Dec. 27.
While Fording says the income trust route is the best one, it has recently begun the search for a rival to the Partnership’s bid in response to shareholder pressure. BHP Billiton (BHP-N), Anglo American (AAUK-Q), and Teck Cominco (TEK-T) are rumoured to be in the market.
Fording shares were trading a dime higher at $32.10 in Toronto at midday on Nov. 13. Shares of Sherritt were off a penny at $4.20.
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