Nunavut Iron's Offer Remains Superior to Amended ArcelorMittal Offer
Baffinland's New Poison Pill and Larger Break Fee Designed to Eliminate
Shareholders' Right to Choose
Baffinland Shareholders Urged to Act to Protect Their Own Interests
TORONTO, Dec. 19 /CNW/ - Nunavut Iron Ore Acquisition Inc. ("Nunavut Iron") announced today that it will apply to the Ontario Securities
Commission tomorrow for an urgent hearing to immediately cease trade
the shareholders' rights plan announced by the board of directors of
Baffinland Iron Mines Corporation ("Baffinland") on December 18, 2010.
It is clear that the Baffinland board adopted the shareholders' rights
plan in order to:
favour ArcelorMittal's inferior $1.25 per share offer;
deny shareholders the right to choose Nunavut Iron's superior Offer of
$1.35 per share for control of Baffinland; and,
end the auction process, an outcome which would be to the detriment of
all Baffinland shareholders.
"The adoption of this rights plan is intended to be an auction-ending
move by the Baffinland board and is not in the best interests of its
shareholders," said Bruce Walter, Chairman of Nunavut Iron. "Unless
set aside, the poison pill will prevent shareholders from considering
Nunavut Iron's current Offer or any increased offer. This action is
particularly offensive for shareholders when it is clear many in the
market have indicated that Nunavut Iron's Offer already delivers
greater value than the modest increase to its offer proposed by
The amended ArcelorMittal offer is below the $1.32 per share price of
Baffinland on the Toronto Stock Exchange on December 17, 2010.
"We believe that Baffinland shareholders should also be appalled by
their Board's $4.5 million increase in the break fee that would be
payable to ArcelorMittal, raising it to $15.5 million," Mr. Walter
said. "In effect, the Board is using funds that belong to the
shareholders in an effort to prevent shareholders from choosing Nunavut
Iron's superior offer."
The Baffinland board adopted the new shareholders' rights plan just
four weeks after the Ontario Securities Commission cease traded
Baffinland's prior shareholders' rights plan on the basis that it was
hindering the ongoing contest between Nunavut Iron and ArcelorMittal.
In rejecting the previous Baffinland poison pill, the Ontario
Securities Commission stated:
"While there is no assurance that there will ultimately be a clear
winner between the ArcelorMittal Offer and the Nunavut Offer,
Baffinland shareholders are capable of making the relevant choices. …It
is the Baffinland shareholders who should determine the outcome of the
two competing bids for their shares."
By creating a new shareholders' rights plan, the Baffinland board has
plainly acted contrary to both the instructions and the intent of the
Ontario Securities Commission. The new poison pill is intended to
remove the right of Baffinland shareholders to "determine the outcome
of the two competing bids".
Shareholders should also consider the advice of the Baffinland board and
its financial advisor set out in the Directors' Circular mailed to
shareholders on October 7, 2010. Nunavut Iron's Offer provides
shareholders with the opportunity to crystallize the value of a
substantial portion of their investment at a significant premium - and
at a continued premium to the ArcelorMittal offer - as well as the
opportunity for continued participation in the benefits of the
development of the Mary River property described by the Baffinland
board in its Directors' circular.
Baffinland shareholders who wish to retain their right to choose and
want to see the auction for Baffinland continue are urged to act
quickly to express their opposition to Baffinland's shareholders'
rights plan by faxing a letter to the Ontario Securities Commission at:
Ontario Securities Commission
20 Queen Street West, Suite 1903
Toronto, ON M5H 3S8
Attention: Mergers & Acquisitions Team
ABOUT NUNAVUT IRON AND IRON ORE HOLDINGS, LP
Nunavut Iron was incorporated under the laws of Canada on August 27,
2010 and has not carried on any material business other than in
connection with matters directly related to the Offer. Nunavut Iron is
wholly owned by Iron Ore Holdings.
Iron Ore Holdings is a limited partnership formed under the laws of
Delaware for the purpose of making the Offer. Iron Ore Holdings is
owned by Bruce Walter, the Chairman of Nunavut Iron, Jowdat Waheed, the
President and Chief Executive Officer of Nunavut Iron, and funds
managed by The Energy & Minerals Group, which is providing the majority
of the equity financing for the Offer. The Energy & Minerals Group is
a private investment firm with a family of funds with over US$2 billion
under management that invest in the energy and minerals sectors.
SOURCE NUNAVUT IRON ORE
For further information: For further information:
SHAREHOLDERS OF BAFFINLAND IRON MINES CORPORATION
Kingsdale Shareholder Services Inc.
Toll Free 1-888-518-1562 (English or French)
Outside North America, Bankers and Brokers Call Collect 416-867-2272
Facsimile: 416-867-2271, Toll Free Facsimile 1-866-545-5580
or visit www.baffinlandoffer.com
Lute & Company