Consolidated Thompson Iron Mines Limited
TSX : CLM

Consolidated Thompson Iron Mines Limited

January 11, 2011 17:03 ET

Consolidated Thompson Iron Mines Limited to be Acquired by Cliffs Natural Resources Inc. for C$17.25 per Share in Cash Representing a Transaction Value of Approximately C$4.9 Billion

Highlights:

- Unanimous recommendation of CLM's Board of Directors

- Wuhan Iron and Steel (Group) Corporation, CLM's largest shareholder at approximately 19%, has agreed to vote in favour of the Arrangement

- Directors, senior officers and other insiders have agreed to vote in favour of the Arrangement

- Implied premium of 30% to both closing share price and 20-day volume weighted average trading price as at January 10, 2011

MONTRÉAL, QUÉBEC--(Marketwire - Jan. 11, 2011) - Consolidated Thompson Iron Mines Limited (TSX:CLM) ("CLM" or the "Corporation") today announced that it has entered into a definitive agreement (the "Arrangement Agreement") pursuant to which Cliffs Natural Resources Inc. ("Cliffs") will acquire all the outstanding common shares of CLM by way of a plan of arrangement (the "Arrangement") for C$17.25 per share in cash, valuing the Corporation at approximately C$4.9 billion. The cash consideration of C$17.25 per share to be received by shareholders represents an implied premium of 30% to both CLM's closing share price of C$13.22 and 20-day volume weighted average trading price of C$13.23 on the Toronto Stock Exchange as at January 10, 2011. Cliffs has committed financing of US$4.0 billion and available liquidity sufficient to fund the proposed transaction.

CLM's Board of Directors, after receiving the recommendation of its Transaction Committee and consulting with its financial and legal advisors, has unanimously determined the Arrangement is in the Corporation's best interest, and that the consideration to be received by CLM shareholders is fair and in the best interest of CLM shareholders and to recommend that CLM shareholders vote in favour of the Arrangement. BMO Capital Markets, acting as financial advisor to the Corporation and its Board of Directors, and GMP Securities L.P., acting as financial advisor to the Transaction Committee, have each provided opinions that the consideration to be received by CLM shareholders is fair, from a financial point of view, to CLM shareholders.

Wuhan Iron and Steel (Group) Corporation and its related entities which hold approximately 19% of the outstanding common shares of CLM as well as directors, senior officers and other insiders have entered into support agreements pursuant to which they have all agreed to vote their common shares in favour of the Arrangement.

Hon. Brian V. Tobin, Executive Chairman, President and Chief Executive Officer commented, "The success we have had is a testament to our partners, employees and management team and their endeavors to deliver superior shareholder value. We are delighted that a company of the financial and technical strength of Cliffs, with considerable nearby infrastructure and experience in the Labrador Trough, is going to take our world-class mine and projects to the next stage. The Board of Directors believes this is a very attractive transaction for our shareholders."

Details of the Transaction

The Arrangement Agreement provides for, among other things, customary board support and non-solicitation covenants (subject to customary "fiduciary out" provisions that entitle the Corporation to consider and accept a superior proposal), a four business day right to match in favour of Cliffs and the payment to Cliffs of a break fee equal to C$156.5 million if the Arrangement is not completed in certain specified circumstances.

The terms and conditions of the Arrangement will be summarized in the Corporation's management proxy circular, which will be filed and mailed to CLM shareholders in late January or early February. The Arrangement will be subject, among other things, to the approval of at least 66 â…”% of the votes cast at a special meeting of CLM shareholders to be called to consider the Arrangement. In addition, the Arrangement will be subject to certain customary conditions, including court approval, relevant regulatory approvals and the absence of any material adverse change with respect to the Corporation. The transaction is expected to close early in the second quarter of 2011, subject to the satisfaction or waiver of various customary closing conditions.

Pursuant to the Arrangement, each outstanding warrant and option to purchase common shares of CLM will be acquired for cancellation by CLM in exchange for a cash payment equal to the product of (i) C$17.25 less the exercise price per common share of the relevant warrant or option, and (ii) the number of common shares underlying the relevant warrant or option.

A change of control offer (the "Debenture Change of Control Offer") will be made for CLM's outstanding 5% convertible unsecured subordinated debentures (the "Debentures") in accordance with their trust indenture dated November 29, 2010 (the "Debenture Indenture"). During the period beginning on the 10th trading day prior to the effective date of the Arrangement and ending at the close of business on the 30th day after the date on which the Debenture Change of Control Offer is made, Debenture holders will be entitled to convert their Debentures into common shares at a reduced conversion price in accordance with the Debenture Indenture based on a formula which is dependent on when the effective date occurs. If, for example, the effective date of the Arrangement occurs at the end of April 2011, the reduced conversion price would be approximately US$11.97. If the effective date of the Arrangement occurs at the end of May 2011, the reduced conversion price would be approximately US$12.00.

It is anticipated that, following consummation of the Arrangement, in any case where the Debenture holders elect to convert their Debentures, the Corporation will elect to deliver cash consideration upon such conversion, as contemplated by the provisions of the Debenture Indenture. Each holder of Debentures should contact their tax advisor for advice having regard to such holder's circumstances.

A change of control offer will be made for CLM's outstanding 8.5% senior secured bonds (the "Bonds") in accordance with their trust indenture dated January 29, 2010 (the "Bond Indenture") at a price of 101% of the full principal amount thereof together with all accrued and unpaid interest thereon. CLM is entitled to defease the Bonds. Pursuant to the Arrangement Agreement, CLM has committed to take all steps necessary to facilitate a defeasance that would be funded by Cliffs, or such other steps requested by Cliffs to facilitate closing of the Arrangement on a basis on which defeasance is not undertaken.

Fraser Milner Casgrain LLP is acting as legal advisor to Consolidated Thompson. Cassels Brock & Blackwell LLP is acting as legal advisor to the Transaction Committee. 

Cliffs has also issued a press release today concerning the Arrangement which is available on their website (www.cliffsnaturalresources.com).

About Consolidated Thompson Iron Mines Limited

Consolidated Thompson Iron Mines Limited is a mining company with mineral exploration and development activities focused on iron ore. Based in Montréal, Canada, it has iron ore rich mining properties in the well known Labrador Trough that spans North-Eastern Québec and Western Newfoundland and Labrador. It is currently operating the Bloom Lake mine and moving towards an initial production rate of 8.0 million tonnes per year of high quality iron ore concentrate. CLM is listed on the Toronto Stock Exchange under the symbol 'CLM' and is part of several S&P/TSX indices including the S&P/TSX Composite Index.

About Cliffs Natural Resources Inc.

Cliffs is an international mining and natural resources company. A member of the S&P 500 Index, Cliffs is the largest producer of iron ore pellets in North America, a major supplier of direct-shipping lump and fines iron ore out of Australia and a significant producer of high and low volatile metallurgical coal. With core values of environmental and capital stewardship, its colleagues across the globe endeavor to provide all stakeholders operating and financial transparency as embodied in the Global Reporting Initiative (GRI) framework. Cliffs is organized through three geographic business units:

The North American business unit is comprised of six iron ore mines owned or managed in Michigan, Minnesota and Canada and six coal mines located in West Virginia and Alabama. The Asia Pacific business unit is comprised of two iron ore mining complexes in Western Australia and a 45% economic interest in a coking and thermal coal mine in Queensland, Australia. The Latin American business unit includes a 30% interest in the Amapa Project, an iron ore project in the state of Amapá in Brazil.

Other projects under development include a biomass production plant in Michigan and Ring of Fire chromite properties in Ontario, Canada. Over recent years, Cliffs has been executing a strategy designed to achieve scale in the mining industry and focused on serving the world's largest and fastest growing steel markets.

News releases and other information on Cliffs are available on the Internet at: http://www.cliffsnaturalresources.com or www.cliffsnaturalresources.com/Investors/Pages/default.aspx?b=1041&1=1.

Forward-Looking Information Cautionary Notice

Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes ''forward-looking information'' under Canadian securities legislation. Forward looking information includes, but is not limited to, statements with respect to the transactions referred to above, the receipt of all necessary approvals and the expected time of closing. Generally, forward-looking information can be identified by the use of forward-looking terminology such as ''plans'', ''expects'' or ''does not expect'', ''is expected'', ''budget'', ''scheduled'', ''estimates'', ''forecasts'', ''intends'', ''anticipates'' or ''does not anticipate'', or ''believes'', or variations of such words and phrases or statements that certain actions, events or results ''may'', ''could'', ''would'', ''might'' or ''will be taken'', ''occur'' or ''be achieved''. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Corporation to be materially different from those expressed or implied by such forward-looking information, including but not limited to the time required to consummate the proposed transactions, the satisfaction or waiver of conditions in the Arrangement Agreement, material adverse changes in the affairs of Consolidated Thompson, any actions or omissions by Consolidated Thompson or its board of directors, any necessary actions to obtain required regulatory or other third-party approvals and consents, and other risks described in the Corporation's Annual Information Form posted under its profile on SEDAR at www.sedar.com. Although Management has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that could cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Corporation does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Contact Information

  • Consolidated Thompson Iron Mines Limited
    Hon. Brian V. Tobin
    Executive Chairman, President and Chief Executive Officer
    514-396-6345
    or
    Consolidated Thompson Iron Mines Limited
    Francois Laurin
    Chief Financial Officer
    514-396-6345