K+S Canada Holdings Inc.

February 07, 2011 18:35 ET

K+S Canada Holdings Inc.: News Release

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 7, 2011) - K+S Canada Holdings Inc. ("K+S Canada"), of 1200 Waterfront Centre, 200 Burrard Street, Vancouver, British Columbia, V6C 3L6, announces that on February 7, 2011 it acquired ownership and control over 5,664,656 common shares (the "Potash One Shares") of Potash One Inc. ("Potash One"), representing approximately 9.33% of the outstanding Potash One Shares. Following the acquisition, together with the Potash One Shares owned by K+S Canada prior to the acquisition on February 7, 2011, K+S Canada owns and controls 87,809,265 Potash One Shares, representing approximately 90.9% of the outstanding Potash One Shares, and a secured convertible debenture of Potash One.

K+S Aktiengesellschaft ("K+S AG"), the indirect beneficial owner of all of the outstanding securities of K+S Canada, is a joint actor of K+S Canada with respect to the acquisition.

K+S Canada made the acquisition pursuant to its offer (the "Offer") to acquire all of the outstanding common shares (the "Potash One Shares") of Potash One Inc. for Cdn$4.50 in cash per Potash One Share made by way of a take-over bid mailed on December 13, 2010. The Offer was made in order to acquire all of the outstanding Potash One Shares. K+S Canada extended the expiry time of the Offer from 6:00 p.m. (Pacific standard time) on January 18, 2011 to 6:00 p.m. (Pacific standard time) on February 4, 2011.

K+S Canada intends to acquire the remaining Potash One Shares pursuant to a compulsory acquisition.

K+S AG entered into a support agreement (the "Support Agreement") with Potash One on November 21, 2010, pursuant to which K+S AG agreed to make the Offer. On December 7, 2010, K+S AG assigned its rights and obligations under the Support Agreement to K+S Canada.

As a condition of entering into the Support Agreement, K+S Canada subscribed for a Cdn $30 million convertible secured debenture from Potash One. The proceeds from the debenture have been used to fund immediate water infrastructure construction commitments related to Potash One's Legacy Project in Saskatchewan. The debenture bears interest at the rate of 8% per annum and will mature on the earlier of: (a) five business days after the date the Support Agreement is terminated; and (b) November 24, 2011. At the option of either the holder or Potash One, the debenture will be convertible on maturity into Potash One shares at a conversion price of Cdn$4.00 per share. Potash One will have the right to prepay the debenture at any time in cash, subject to the holders' rights to elect to have the prepayment amount paid in shares. Potash One's debenture obligations is secured by all of the Potash One's assets. Closing of K+S Canada's purchase of the convertible secured debenture occurred on November 24, 2010.

K+S Canada entered into lock-up agreements on November 26, 2010 with all of the directors and certain senior management of Potash One and the trustee under Potash One's Stock Compensation Trust Plan (collectively, the "Locked-Up Securityholders"), pursuant to which the Locked-Up Securityholders agreed to deposit all Potash One Shares owned by the Locked-Up Shareholders to the Offer - comprising 8,181,105 Potash One Shares and 11,802,500 options to acquire common shares of Potash One ("Potash One Options") which the Locked-Up Securityholders agreed to convert into Potash One Shares prior to the original expiry time of the Offer.

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