Chengdu Tianqi submits C$806 million proposal to acquire Talison Lithium for C$7.15 per share
TORONTO, Nov. 19, 2012 /CNW/ - Chengdu Tianqi Industry (Group) Co., Ltd. ("Tianqi") today announced that its wholly-owned subsidiary Windfield Holdings Pty Ltd. ("Windfield") submitted a formal written proposal to the board of Talison Lithium Limited ("Talison") under which Windfield would acquire all of the shares in Talison ("Shares") that it does not already own, at a price of C$7.15 per Share, by way of a scheme of arrangement (the "Proposal"). The aggregate consideration to be paid to Talison securityholders under Windfield's Proposal would be approximately C$806 million.
Windfield is confident that Talison's board will consider the Proposal to be a "Superior Proposal" as compared to the scheme of arrangement involving Rockwood Holdings, Inc. (the "Rockwood Scheme"). The price stated in Windfield's Proposal of C$7.15 per Share, reflects a premium of C$0.65 per Share, or 10%, to Rockwood's current offer price.
Windfield believes its Proposal will be positive for the management and staff of Talison as well as providing a premium price for shareholders. Windfield views the acquisition of Talison as an opportunity to partner with a strong management team who can successfully grow and add value to Talison's existing business, including through continued product innovation. Windfield supports Talison's evaluation of the construction of a minerals conversion plant in Western Australia to produce lithium carbonate by 2015 and Tianqi has technical and marketing expertise that can assist Talison in this regard.
Windfield and Tianqi also intend to open up further markets for Talison's product in both Asian and other global markets, including encouraging producers of lithium chemicals to adopt Australian spodumene-sourced lithium. Tianqi notes that analysts such as Byron Capital Markets have noted that if, by contrast, Rockwood were to acquire Talison, Rockwood "would become the dominant lithium producer…. [with] a market share of over 50% of the lithium products sold into various industries". This could potentially have an adverse impact on Talison's existing customers and impede the development of lithium usage more generally.
Windfield has no current plans to alter the current operations of the business or change the current management team. Windfield is highly supportive of the management team, admires their achievements to date and intend to work closely with them in setting the strategic direction of the company going forward.
The Proposal includes signed commitment letters to support the funding required under it, including financing to be sourced from China Development Bank and an ADM Capital advised lender. Such commitment letters are subject to certain terms and conditions, including the entering into of binding facility agreements.
The Proposal is subject to limited, confirmatory due diligence and the negotiation and entering into of a scheme implementation agreement with Talison. Windfield believes both of these conditions can be completed in a relatively short timeframe once Talison's board engages with Windfield.
Tianqi has made filings with various regulatory bodies whose approvals are required in order for Windfield to complete an acquisition of Talison. At the time of submitting this Proposal, Tianqi has obtained all the necessary Chinese Government approvals including the approvals of China's National Development and Reform Commission ("NDRC"), China's Ministry of Commerce ("MOFCOM") and China's State Administration of Foreign Exchange ("SAFE"). Tianqi is currently not aware of any reason why approvals from the Australian Treasurer under Australia's Foreign Acquisitions and Takeovers Act would not be forthcoming.
At the time of submitting its Proposal, Windfield has acquired, and agreed to acquire, an aggregate of 18,443,662 Shares, representing 16.14% of the issued and outstanding Shares, calculated on a non-diluted basis. This is comprised of the 17,143,422 Shares, representing 14.99% of the issued and outstanding Shares calculated on a non-diluted basis which were disclosed in the press release and early warning reports that were issued and filed on November 12, 2012 and a subsequent agreement that Windfield entered into for the Purchase of an additional 1,300,240 Shares, representing 1.14% of the issued and outstanding Shares, calculated on a non-diluted basis, at C$7.10 per share subject to certain price adjustments and subject to the condition that Tianqi receives approval from the Australian Treasurer under Australia's Foreign Acquisitions and Takeovers Act.
Tianqi believes that the formal proposal put to the Talison Board today represents a "Superior Proposal" as defined in the Scheme Implementation Agreement under the Rockwood proposal and has requested that Talison announce as soon as possible that it intends to postpone the shareholder meeting currently scheduled in relation to the lower-priced Rockwood offer whilst due diligence and documentation are negotiated for schemes of arrangement involving Tianqi.
If for any reason, Talison elects not to engage on Tianqi's higher offer
then registered shareholders who wish to revoke a proxy or have queries
about how they can vote should contact Computershare on 1-800-564-6253
(toll free in Canada and the United States) or 514-982 7555
(international direct dial) on business days between the hours of 9a.m.
and 5p.m. Eastern Time. See http://corporate.computershare.com/Canada/OurBusiness/cis/CU/Pages/SecurityholderAccountInquiries.aspx
Beneficial shareholders who wish to change their voting instructions for the Rockwood Scheme or have queries about how they can vote should contact their broker.
Neither this release nor the Proposal constitutes a public proposal under section 631 of the Australian Corporations Act 2001 by Tianqi or Windfield to make a takeover bid for securities in any company.
Tianqi, via its subsidiary Sichuan Tianqi Lithium Industries, Inc. ("Tianqi Lithium"), is the world's largest hard rock lithium converter. With over ten years experience in the research, production and sales of lithium chemicals, Tianqi Lithium offers a diverse portfolio of products ranging from carbonate to lithium metals, in order to meet almost all kinds of raw material demands from battery producers. Tianqi Lithium holds a significant market share and is one of the most important raw material providers for the clean energy industry in China.
Tianqi has enjoyed a strong and mutually beneficial relationship with Talison and its predecessors since 1997. Tianqi (through subsidiaries) currently purchases approximately 40% of the chemical grade lithium concentrate produced by Talison and is the sole distributor in China of Talison's technical grade lithium concentrate.
An early warning report will be filed on SEDAR and will be available for review at www.sedar.com under Talison's profile.
Tianqi's financial adviser is RedBridge Grant Samuel, its tax and accounting adviser is PricewaterhouseCoopers, and its legal advisers are Linklaters and ZhongLun in China, Allens in Australia and Stikeman Elliott in Canada.
Further Information About Tianqi:
Tianqi is a privately held Chinese company founded in 2003. Its business activities are primarily conducted through the following subsidiaries:
Sichuan Tianqi Lithium Industries, Inc. - a Chinese company listed on the Shenzhen Stock Exchange, engaged in
the production of lithium carbonate and other lithium products from
chemical-grade lithium concentrates sourced from Talison;
Sichuan Tianqi Industry Co., Ltd. - a distributor of technical grade lithium concentrates, as the sole
distributor for Talison in China;
Chengdu Tianqi Machinery - provides spare parts and accessories for machinery and electrical
equipment used in the construction, packing and agriculture sectors;
Chengdu Sendasun Agricultural Machinery Co., Ltd. - undertakes research, development, manufacturing and sales of
Tianqi and its subsidiaries conduct their operations mainly from China, but have customers, business partners and suppliers in various countries around the world, including Europe, Australia, the United States and Japan.
More information about Tianqi is available from the following website: www.tianqigroup.cn/en/Index/aboutus.html
SOURCE: Chengdu Tianqi Industry Group Co., LtdFor further information:
Greg Baxter, Kreab Gavin Anderson
+61 2 9552 4499
+61 419 461 368
Joshua Goldman-Brown, Kreab Gavin Anderson
+1 646 490 2767