Timminco Limited
TSX : TIM

Timminco Limited

April 27, 2007 00:02 ET

Timminco Limited Receives Notice of Conversion of First Note Payable to Controlling Shareholder

TORONTO, ONTARIO--(CCNMatthews - April 26, 2007) -

THIS PRESS RELEASE MAY NOT BE PUBLISHED, DISTRIBUTED OR TRANSMITTED IN THE UNITED STATES.

Timminco Limited ("Timminco" or the "Corporation") (TSX:TIM), a leading producer of specialty and light metals, and its principal shareholder, Safeguard International Fund, L.P. ("Safeguard"), jointly announced today that Safeguard gave written notice to the Company that it is exercising its right to convert the entire principal amount outstanding under the US$2.0 million convertible promissory note issued March 7, 2006 (the "First Note") to an affiliate of Safeguard into 5,601,000 common shares of the Company at a conversion rate of Cdn$0.40 per common share.

The noon rate of exchange on April 26, 2007 as reported by the Bank of Canada for the conversion of United States dollars into Canadian dollars was US$1.00 equals Cdn$1.1202. Accordingly, the Canadian dollar equivalent of the United States dollars comprised in the principal amount of the First Note is Cdn$2,240,400.

As at the date hereof, Timminco has 75,132,614 common shares issued and outstanding. Safeguard indirectly holds 40,909,092 common shares of Timminco (representing 54.4% of the number of Timminco's issued and outstanding common shares). In addition to the First Note, Safeguard also holds a US$3.0 million principal amount promissory note issued August 31, 2006 that is convertible at any time at the option of Safeguard for common shares of the Corporation at a price of Cdn$0.40 per common share (the "Second Note") and, through an affiliate, a Cdn$4,500,000 principal amount promissory note issued March 1, 2007 that is convertible at any time at the option of Safeguard for common shares of the Corporation at a price of Cdn$0.42 per common share (the "Third Note"). The loan and related security for each of the First Note, the Second Note and the Third Note are subordinated to the indebtedness and the security provided by the Company's senior lender, Bank of America, N.A.

On April 24, the Corporation filed a final prospectus (the "Prospectus") in connection with a public offering (the "Offering") of 10,000,000 common shares at a price of Cdn$2.60 per common share for gross proceeds of Cdn$26,000,000. The Offering was co-led by Clarus Securities Inc. and Paradigm Capital Inc. as underwriters (the "Underwriters"). In connection with the Offering, the Corporation also granted to the Underwriters an over-allotment option to purchase an additional 1,500,000 common shares at a price of Cdn$2.60 per share, exercisable for a period of 30 days from the closing of the Offering. The Offering is expected to close on or about April 30, 2007.

The maximum number of common shares of the Corporation that can be issued to Safeguard if the entire principal amount of the First Note, the Second Note and the Third Note are converted into common shares of the Corporation is contained in Schedule A to this press release, based on the number of common shares of the Corporation that are issued and outstanding as at the date hereof, both before and after giving effect to the Offering (including, with respect to the Offering, before and after giving effect to the exercise of the over-allotment option). The issuance of common shares to Safeguard on conversion of the First Note is expected to close concurrently with the closing of the Offering.

Prior to March 29, 2007, Safeguard's 40,909,092 common shares of Timminco were held directly by Becancour, LP ("BLP"). Safeguard, a limited partner of BLP, directly owned 99% of BLP, and owned the remaining 1% indirectly through another wholly-owned subsidiary, Becancour GP, Inc. ("BGP"), the general partner of BLP. On March 29, 2007, Safeguard reorganized its indirect holdings of Timminco. As a result of this reorganization, AMG Advanced Metallurgical Group, N.V. ("AMG") currently holds 40,909,092 common shares of Timminco and Safeguard owns 91.8% of AMG directly.

Safeguard is a private equity fund primarily engaged in leveraged acquisitions as well as a wide range of other private equity investments, including growth equity financings, recapitalizations and acquisition oriented financing transactions. The registered office of each of Safeguard, BLP and BGP is located at 9 East Loockerman Street, City of Dover, County of Kent, Delaware, U.S.A. 19901. The registered office of AMG is located at Prins Bernhardplein 200 1097 JB, Amsterdam, Netherlands.

FORWARD LOOKING STATEMENTS

This news release contains forward-looking statements concerning the Company's business and operations. The Company cautions that, by their nature, forward-looking statements involve risk and uncertainty and the Company's actual results could differ materially from those expressed or implied in such statements. Such statements include comments regarding the volume and value of sales contracts of its businesses, its ability to deliver under such contracts and the future prices of its products.

There are financial and operational risks inherent in the business, which include, but are not limited to: commodity prices, currency exchange, interest rate, capital, credit, regulatory, political, operational and environmental risks. The Company takes specific measures to manage these risks, and any forward-looking statements in this news release were based on the assumption of no significant changes or trends with respect such risk factors. Although the Company maintains insurance against risks that are typical in its industry, such insurance may not provide adequate coverage under all circumstances. Reference should be made to the most recent Management Discussions and Analyses and the Prospectus for a description of the major risk factors. The Company disclaims any duty to update forward-looking statements other than through relevant future Management Discussions and Analyses.

ABOUT TIMMINCO

TIMMINCO LIMITED is an international company, a world leader in the production and marketing of alloy magnesium, silicon metal and specialty ferrosilicon, calcium and strontium alloys. The Company's products are used in a broad range of specialized industrial applications and industries such as engineered extruded products, chemical, pharmaceutical, electronics and automotive and metallurgical. The Company participates in the supply of aluminium wheels to high end European automobile manufacturers through its 47% equity interest in Fundo Wheels AS. The Company's common shares are traded on the Toronto Stock Exchange under the symbol TIM.



SCHEDULE A

---------------------------------------------------------------------------
Number Number and Number and Number and
Of Percentage of Percentage of Percentage of
Common Common Common Common Shares
Shares Shares held by Shares held by held by
Safeguard and Safeguard and Safeguard and
its affiliates its affiliates its affiliates
after giving after giving after giving
effect to effect to effect to
conversion conversion conversion and
but before and the the Offering
giving effect to Offering (including full
the Offering (without exercise of the
giving effect to Over-Allotment
the exercise of Option)
the Over-
Allotment
Option)
----------------------------------------------------------------------------
Common 40,909,092 40,909,092 40,909,092
Shares held common common common
by shares shares shares
Safeguard
And 54.4% 48% 47.2%
its (40,909,092 (40,909,092 (40,909,092
affiliates, /75,132,614 /85,132,614 /86,632,614
as common common common
at the date shares) shares) shares)
hereof.
----------------------------------------------------------------------------
Maximum 5,601,000 46,510,092 46,510,092 46,510,092
Number of common common common common
Common shares shares shares shares
Shares that 57.6% 51.2% 50.4%
may be (46,510,092 (46,510,092 (46,510,092
Acquired on /80,733,614 /90,7 33,614 /92,233,614
Conversion common common common
of US$2 shares) shares) shares)
Million
Convertible
Note issued
March 7,
2006
("First
Note")
---------------------------------------------------------------------------
Maximum 8,401,500 54,911,592 54,911,592 54,911,592
Number of common common common common
Common shares shares shares shares
Shares that 61.6% 55.4% 54.6%
may be (54,911,592 (54,911,592 (54,911,592
Acquired on /89,135,114 /99,135,114 /100,635,114
Conversion common common common
of US$3 shares) shares) shares)
Million
Convertible
Note issued
August 31,
2006 (1)
("Second
Note")
---------------------------------------------------------------------------
Maximum 10,714,286 65,625,878 65,625,878 65,625,878
Number of common common common common
Common shares shares) shares) shares)
Shares
that 65.7% 59.7% 58.9%
may be (65,625,878 (65,625,878 (65,625,878
Acquired on /99,849,400 /109,849,400 /111,349,400
Conversion common common common
of the shares) shares) shares)
Cdn$4.5
Million
Convertible
Note issued
March 1,
2007 (2)
("Third
Note")
---------------------------------------------------------------------------


NOTES:

(1) Under the rules of the TSX, shareholder approval must be obtained for private placements that during any six-month period are to insiders for listed securities greater than 10% of the number of securities of the listing issuer which are outstanding on a non- diluted basis prior to the date of closing of the first private placement to an insider during the six-month period. At as the date hereof, based on the rate of exchange referred to above, the conversion of US$332,899 principal amount of the Second Note into 887,888 common shares is subject to shareholder approval. The Corporation intends to seek shareholder approval at its annual and special meeting of shareholders scheduled to be held on May 31, 2007.

(2) Under the rules of the TSX, shareholder approval must be obtained for private placements that during any six-month period are to insiders for listed securities greater than 10% of the number of securities of the listing issuer which are outstanding on a non- diluted basis prior to the date of closing of the first private placement to an insider during the six-month period. At as the date hereof, the conversion of $1,344,430 principal amount of the Third Note into 3,201,024 common shares is subject to shareholder approval. The Corporation intends to seek shareholder approval at its annual and special meeting of shareholders scheduled to be held on May 31, 2007.

This press release does not constitute or form part of any offer or solicitation to purchase or subscribe for securities in the United States or by U.S. persons. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"). They may not be offered or sold in the United States, or to or for the account or benefit of a U.S. Person, except pursuant to an exemption from the registration requirements of the U.S. Securities Act.

Contact Information

  • Timminco Limited
    Robert Dietrich
    Executive Vice President and CFO
    (416) 364-5171
    (416) 364-3451 (FAX)
    Email: rdietrich@timminco.com