Noront Resources agrees to Wyloo takeover at $1.10 per share

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Noront Resources Ltd. [NOT-TSXV; NOSOF-OTC] settled an arrangement agreement with Wyloo Metals Pty. Ltd. and Wyloo Canada Holdings Pty. Ltd. under which Wyloo Metals agreed to acquire up to all of the issued and outstanding common shares of Noront it does not already own, directly or indirectly, for $1.10 per common share.

Under the agreement, shareholders must sell all or a portion of their common shares to Wyloo Metals in order to receive cash consideration of $1.10 per common share. Shareholders who do not make a sale will retain their shares following the closing of the transaction. Wyloo Metals can acquire all of the common shares that it does not already own, directly or indirectly, for $1.10 per share including those shares not subject to a sale election if less than 10% of the outstanding common shares are not subject to a sale election.

The consideration of $1.10 in cash/share represents about a 358% premium to the unaffected closing price of the common shares on May 21, 2021, and an approximate 47% premium to the cash offer of 75 cents/common share made by BHP Western Mining Resources International Pty. Ltd.

Under terms of the support agreement among Noront, BHP and BHP Lonsdale Investments Pty. Ltd., upon Noront determining a superior proposal is received, BHP has the right, but not the obligation, to offer to amend terms of the BHP offer.

If BHP does not exercise its right to match within the five-day period provided for in the support agreement and Noront terminates the support agreement, or the support agreement is otherwise terminated for any reason, then the arrangement agreement will be entered into by Noront and Wyloo Metals.

If the arrangement agreement is going to be signed, Wyloo Metals agreed to provide a loan to Noront of up to $29.38-million to finance, among other things, the termination payment of $17.78-million payable to BHP upon the termination of the support agreement, as well as other related costs. The term of the Wyloo loan will be 12 months from completion of the Wyloo Metals transaction, with interest of 5% per annum payable quarterly in cash or common shares of Noront, at the option of Noront and subject to receiving shareholder approval for the payment of interest in common shares of Noront, and subject to TSXV approval.

It is expected that if the support agreement is terminated, certain Noront shareholders, including Noront directors and senior management, will enter into lock-up agreements under which they will agree to vote in support of the Wyloo offer. Wyloo Metals currently holds approximately 37.2% of the outstanding common shares (on a basic basis).

Terms of the arrangement agreement, if executed, will provide that Wyloo Metals will be entitled to a termination payment of $26-million (equal to approximately 4% of the total equity value of the transaction based on 100% of Noront’s fully diluted shares outstanding) if the arrangement agreement is terminated. This termination payment will not be payable if BHP elects to match the Wyloo offer and Noront and Wyloo Metals therefore do not enter into the arrangement agreement.

If Noront signs an arrangement agreement with Wyloo Metals, additional information will be provided to Noront shareholders in advance of a special shareholders meeting to vote on the plan of arrangement.

Noront is focused on the development of its high-grade Eagle’s Nest nickel, copper, platinum and palladium deposit, and chromite deposits, including Blackbird, Black Thor and Big Daddy, all located in the James Bay Lowlands of Ontario in the Ring of Fire metals camp.


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