Rio Algom tries again for PCA amalgamation

Rio Algom says there are a number of benefits to be gained from an amalgamation with its subsidiary, Potash Co. of America, and says it is again trying to push through the amalgamation, after failing to do so this past summer.

Rio Algom holds all of pca’s common shares, but needs the approval of two-thirds of the preferred shareholders before amalgamation can be accomplished.

In July, preferred shareholders rejected a Rio Algom bid of $13 per share. This time around, Rio is offering $18 cash or, at shareholders’ option, one Rio Algom common share for each pca preferred share held.

One result of amalgamation, a Rio Algom spokesman tells The Northern Miner, would be a gain to Rio Algom of $110 million in Potash Co. tax credits.

Another, he said, is that while it is impossible right now for pca to raise financing, amalgamation would open the door, with the tax credits themselves becoming available for project funding.

He said such funds could be used for instance, to bring pca’s Saskatoon potash mine, now closed by flooding, back into operation. “We still have a lot of faith in potash,” he said.

Rio Algom says if all of the pca preferred shareholders elect to accept Rio Algom common shares, it would result in the issue of 1,200,000 Rio Algom common shares, for a 2.8% increase in the number of its shares outstanding.

It’s anticipated, it adds, that a meeting of all shareholders of pca will be held next month to vote on the transaction.

An independent review committee of the pca board, including two directors elected by the preferred shareholders, has reviewed the transaction and the board is unanimously recommending acceptance.