BEIJING, April 13, 2012 /CNW/ - Hebei Iron & Steel Group Co., Ltd. ("Hebei") announced today that it has agreed to acquire 25,828,305 common shares (the "Shares") of Alderon Iron Ore Corp. ("Alderon") representing 19.9% of the issued and outstanding common shares by way of a private placement (the "Private Placement") pursuant to the terms of a subscription agreement between Hebei and Alderon dated April 13, 2012 (the "Subscription Agreement"). The Shares will be acquired at a price per Share of Cdn.$3.42, for an aggregate purchase price of Cdn.$88,332,803, in each case subject to adjustment in accordance with the terms of the Subscription Agreement. Upon closing of the Private Placement, it is expected that Hebei will have beneficial ownership of and control and direction over 19.9% of the issued and outstanding common shares of Alderon. Hebei is a state-owned enterprise of the People's Republic of China. The closing of the Private Placement is subject to receipt of all necessary approvals, including approvals of the various government entities in the People's Republic of China. Hebei will acquire the Shares for investment purposes. Subject to applicable contractual restrictions, Hebei may increase or decrease its beneficial ownership of Alderon's securities depending on future economic or market conditions.
The Subscription Agreement contains customary representations, warranties, covenants and conditions of closing in relation to the purchase and sale of the Shares. On closing of the Private Placement, Hebei will enter into an investor rights agreement with Alderon (the "Investor Rights Agreement"). Pursuant to the Investor Rights Agreement, Hebei will have the right to appoint two directors for as long as Hebei holds at least 17% of the outstanding common shares of Alderon and appoint one director for as long as Hebei holds less than 17% but 7.5% or more of the outstanding common shares of Alderon. Hebei has the right to maintain its percentage ownership interest through participation in additional issuances of common shares of Alderon or securities convertible into common shares. Hebei has agreed to hold the purchased Shares until at least January 31, 2013, and longer under certain circumstances, and has also been granted limited registration rights in respect of the Shares and any additional common shares of Alderon that it acquires.
On closing of the Private Placement, Hebei and Alderon will also enter into a joint venture arrangement pursuant to which Hebei has the right to acquire a 25% interest in Alderon's principal asset referred to as the "Kami Project". Upon acquisition of the 25% interest in the project, Hebei will be obligated to purchase upon the commencement of commercial production 60% of the actual annual production from the Kami Project up to a maximum of 4.8 million tonnes of the first 8.0 million tonnes of iron ore concentrate produced annually at the Kami Project.
For further information:
Hebei Iron & Steel Group Co., Ltd.
16/F Shimao Tower
No. 92 Jianguo Road