TORONTO, May 8, 2013 /CNW/ - Sprott Inc. ("Sprott") (TSX:SII) and Sprott
Resource Lending Corp. (the "Company" or "Sprott Resource Lending")
(TSX:SIL) (NYSE MKT:SILU) are pleased to announce that they have
entered into a definitive agreement (the "Arrangement Agreement")
pursuant to which Sprott will acquire, by way of a court-approved plan
of arrangement under the Canada Business Corporations Act ("CBCA"), all of the issued and outstanding common shares of Sprott
Pursuant to the terms of the Arrangement Agreement, each Sprott Resource
Lending shareholder (other than Sprott) will receive 0.5 of a Sprott
common share and C$0.15 in cash for each Sprott Resource Lending common
share held, implying an offer of C$1.65 per share based on Sprott's
closing price on the Toronto Stock Exchange ("TSX") on May 7, 2013. The
offer represents approximately a 20.4% premium to the Company's 20-day
volume weighted average price on the TSX for the period ending May 7,
2013 and a 11.5% premium to the Company's closing price on the TSX on
May 7, 2013.
"This acquisition provides Sprott with more than C$220 million in new
capital which will be used to seed and launch new initiatives, while
continuing to grow its private lending business through a new lending
partnership expected to launch later this year," said Jack Lee, Lead
Director of Sprott. "This transaction will both support Sprott's growth
in international markets and provide the company with a strong balance
sheet to pursue various growth opportunities."
"We are pleased to enter into this agreement with Sprott," said Murray
Sinclair, Chairman of Sprott Resource Lending's Board of Directors.
"This transaction provides our shareholders with a premium to the
current share price and gives them an opportunity to participate in the
growth of a larger, more diversified company with significant upside to
the resource sector."
Based on the currently issued and outstanding shares of the Company as
of the date of this announcement, the number of Sprott common shares to
be issued as part of the consideration will be approximately 69 million
shares, representing approximately 39.0% of Sprott's currently issued
and outstanding shares on a non-diluted basis.
The transaction values the Company's equity at approximately C$243
million on a non-diluted basis. Following completion of the
transaction, Sprott Resource Lending shareholders will own
approximately 28.1% of Sprott's outstanding common shares on a
non-diluted basis, based on their current shareholdings in Sprott
The Board of Directors of Sprott Resource Lending formed a Special
Committee of independent directors to consider the Arrangement
Agreement, the terms of which were negotiated at arm's length with
Sprott. Cormark Securities Inc. ("Cormark"), independent valuator to
the Special Committee of Sprott Resource Lending, provided an oral
opinion to the effect that, based upon and subject to certain
assumptions, limitations and qualifications, the consideration is fair,
from a financial point of view, to the shareholders of Sprott Resource
Lending (other than Sprott). In addition, under the supervision of the
Special Committee, Cormark has prepared an independent valuation and
has provided an oral opinion that, based upon and subject to the
assumptions, limitations and qualifications in such opinion, as at May
8, 2013, the fair market value of the Sprott Resource Lending shares is
in the range of C$1.47 to C$1.57 per share. The transaction is a
"business combination" for the purposes of Multilateral Instrument
61-101 - Protection of Minority Security Holders in Special Transactions.
The Board of Directors of Sprott Resource Lending, based on the
recommendation of the Special Committee, is unanimously recommending
that Sprott Resource Lending shareholders vote in favour of the
Other Aspects of the Transaction
Directors and officers of the Company as well as certain shareholders of
the Company, including Dundee Corporation and certain associates of
Sprott, have entered into voting support agreements with Sprott
pursuant to which each such party has agreed to vote in favour of the
transaction. Such locked-up shares represent approximately 25.4% of the
common shares of the Company outstanding on a non-diluted basis.
Completion of the transaction is subject to a number of customary
conditions, including: approval of the plan of arrangement by the
Ontario Superior Court of Justice, which will also serve as the basis
for the exemption from the registration requirements of the United States Securities Act of 1933, as amended (the "US Securities Act"); a favourable vote of at least
(i) 66 2/3% of the holders of Sprott Resource Lending common shares and
(ii) a simple majority of the votes cast by minority shareholders of
Sprott Resource Lending, voted at an annual and special meeting of
shareholders expected to be held in late June 2013; and the receipt of
all necessary regulatory and stock exchange approvals. The Arrangement
Agreement includes a customary non-solicitation clause and right to
match covenants and provides for the payment of a C$6.8 million break
fee to Sprott, and expense reimbursement to Sprott and the Company
under certain circumstances. Sprott common shares to be received by
shareholders of the Company pursuant to the plan of arrangement will be
listed solely on the TSX and will not be registered under the US
Securities Act but will be offered under an exemption to the
registration requirements thereunder and under applicable state "blue
sky" laws in the United States.
As of the date hereof, Eric Sprott owns or has control or direction over
94,241,270 Sprott common shares representing approximately 52.7% of the
issued and outstanding Sprott common shares. Mr. Sprott does not own or
control any shares of Sprott Resouce Lending. After giving effect to
the transaction, Mr. Sprott's position in Sprott will be diluted to
approximately 38.0%. As Sprott is expected to issue in excess of 25.0%
of its currently issued and outstanding common shares under the
transaction, the approval of the issuance of the Sprott common shares
by Sprott's shareholders is required under subsection 611(c) of the TSX
Company Manual. As contemplated by subsection 604(d) of the TSX Company
Manual, Sprott has satisfied this requirement by obtaining the written
consent of Mr. Sprott based on his ownership or control or direction
over more than 50.0% of Sprott's common shares.
In addition, Rick Rule, an insider of each of Sprott and Sprott
Resources Lending, owns or has control or direction over 19,267,500
Sprott common shares representing approximately 10.8% of the issued and
outstanding Sprott common shares and 12,455,613 Sprott Resource Lending
common shares representing approximately 8.5% of the Company's issued
and outstanding common shares. After giving effect to the transaction,
Mr. Rule will own or have control or direction over 25,495,307 Sprott
common shares representing approximately 10.3% of Sprott's issued and
outstanding common shares. Further, assuming completion of the
transaction, insiders of Sprott (other than Mr. Rule), who own common
shares of the Company, will be issued an aggregate of approximately 2.1
million Sprott common shares.
Completion of the transaction is currently expected to occur in early
July 2013. The Board of Directors of Sprott Resource Lending has
approved the payment of a regular quarterly dividend of C$0.015 per
common share in respect of the Company's first fiscal quarter for
payment on June 7, 2013 to shareholders of record on May 21, 2013 and
hereby notifies the Company's shareholders that it will designate the
full amount of such dividend as an "eligible dividend" for purposes of
the Income Tax Act (Canada). Further, Sprott, in accordance with its dividend policy and
subject to applicable law, expects to issue a regular quarterly
dividend in respect of Sprott's second fiscal quarter, in due course,
following the completion of the transaction.
The terms and conditions of the Arrangement Agreement will be disclosed
in more detail in Sprott Resource Lending's management information
circular, which is expected to be filed and mailed to Sprott Resource
Lending shareholders in late May 2013.
Details regarding these and other terms of the transaction are set out
in the Arrangement Agreement, which will be available on SEDAR at www.sedar.com.
Advisors and Legal Counsel
Heenan Blaikie LLP is acting as legal counsel to Sprott. Stikeman
Elliott LLP is acting as legal counsel to Sprott Resource Lending.
Cormark Securities is acting as financial advisor to the Special
Committee of the Board of Directors of Sprott Resource Lending.
A conference call is scheduled for May 9, 2013 at 10:00 a.m. EDT. The
Toronto area call-in number is (647) 427-7450 and the toll-free call-in
number is (888) 231-8191. The passcode is 63855481#. The call will also
be webcast at www.sprottinc.com and www.newswire.ca.
About Sprott Inc.
Sprott is a leading independent asset manager dedicated to achieving
superior returns for its clients over the long term. Sprott currently
operates through four business units: Sprott Asset Management LP,
Sprott Private Wealth LP, Sprott Consulting LP, and Sprott U.S.
Holdings Inc. Sprott Asset Management is the investment manager of the
Sprott family of mutual funds and hedge funds and discretionary managed
accounts; Sprott Private Wealth provides wealth management services to
high net worth individuals; and Sprott Consulting provides management,
administrative and consulting services to other companies. Sprott U.S.
Holdings Inc. includes Sprott Global Resource Investments Ltd, Sprott
Asset Management USA Inc., and Resource Capital Investments
Corporation. Sprott is headquartered in Toronto, Canada, and is listed
on the Toronto Stock Exchange under the symbol "SII". For more
information on Sprott, please visit www.sprottinc.com.
About Sprott Resource Lending Corp.
Sprott Resource Lending (www.sprottlending.com) specializes in lending to resource companies on a global basis.
Headquartered in Toronto, the Company seeks to generate income from
lending activities as well as the upside potential of bonus
arrangements with borrowers generally tied to the underlying property
or shares of the borrower. Pursuant to a management services agreement
and a partnership agreement, Sprott Lending Consulting Limited
Partnership ("SLCLP") provides Sprott Resource Lending day to day
business management as well as other management and administrative
services. SLCLP is a wholly owned subsidiary of Sprott (www.sprottinc.com), the parent of Sprott Asset Management LP (www.sprott.com). For more information about Sprott Resource Lending, please visit
Caution Regarding Forward-Looking Statements and Information
This document includes certain statements that constitute
"forward-looking statements" and "forward-looking information" within
the meaning of applicable securities laws (collectively,
"forward-looking statements"). These statements include statements
regarding Sprott's or Sprott Resource Lending's intent, or the beliefs
or current expectations of Sprott's or Sprott Resource Lending's
officers and directors. Such statements are typically identified by
words such as "believe", "anticipate", "estimate", "project", "intend",
"expect", "may", "will", "plan", "should", "would", "contemplate",
"possible", "attempts", "seeks" and similar expressions.
Forward-looking statements may relate to Sprott's or Sprott Resource
Lending's future outlook and anticipated events or results.
By their very nature, forward-looking statements involve numerous
assumptions, inherent risks and uncertainties, both general and
specific, and the risk that predictions and other forward-looking
statements will not prove to be accurate. Do not unduly rely on
forward-looking statements, as a number of important factors, many of
which are beyond Sprott's or Sprott Resource Lending's control, could
cause actual results to differ materially from the estimates and
intentions expressed in such forward-looking statements. These factors
include, but are not limited to: (a) the inability of Sprott Resource
Lending to obtain (i) approval of the transaction by the court and the
other regulatory approvals, and (ii) approval of the transaction by the
shareholders at an annual and special meeting of Sprott Resource
Lending shareholders; and (b) the occurrence of any other event, change
or other circumstance that could give rise to the termination of the
Arrangement Agreement, or the delay of consummation of the transaction
or failure to complete the arrangement for any other reason.
Forward-looking statements speak only as of the date those statements
are made. Except as required by applicable law, neither Sprott nor
Sprott Resource Lending assume any obligation to update, or to publicly
announce the results of any change to, any forward-looking statement
contained herein to reflect actual results, future events or
developments, changes in assumptions or changes in other factors
affecting the forward-looking statements.
SOURCE: Sprott Inc.
For further information:
Investor Contact Information:
Sprott Resource Lending Corp.
Chief Financial Officer
Sprott Resource Lending Corp.
Director of Communications