Shareholders approve Fording plan (February 19, 2003)

The plan of arrangement under which coal producer Fording (FDG-T) would be converted into an income trust has received shareholder approval at a special meeting in Calgary, allowing Fording to combine its assets with the coking-coal operations of Sherritt International (S-T) and Teck Cominco (TEK-T).

The plan won 99% of the shares voted at the meeting, leaving the company to seek the approval of the Alberta Court of Queen’s Bench on Feb. 20. Once the courts and securities regulators approve the plan, the deal to merge the assets will probably take effect at the end of February.

Under the terms of the agreement, Fording, Sherritt (which had launched a hostile takeover bid for Fording in October) and Teck Cominco (which came in with a “white knight” bid in December) will form a new metallurgical coal partnership to manage Fording’s metallurgical coal mines, Teck’s Elkview mine in British Columbia, and the coking-coal operations of Luscar Coal, now owned by Sherritt — Line Creek, Luscar, and Cheviot, all in Alberta.

Fording shareholders will have about 39% of the new company; Sherritt and the Ontario Teachers’ Pension Plan Board will own or control 36%; and Teck and terminal operator Westshore Terminals will have about 9% each. Pittsburgh-based Consol Energy (CNX-N) will gain a 7% interest through its part-ownership of some of the Luscar assets.