Noront Board of Directors unanimously determines Wyloo Metals Offer of C$0.7 per share to be a superior proposal


Noront reaches agreement with Wyloo Metals to acquire Noront for C$0.7 per share. (Credit: Khusen Rustamov from Pixabay)

Noront Resources Ltd. (“Noront” or the “Company”) (TSXV: NOT) today announced it has settled the terms of a proposal from Wyloo Metals Pty Ltd. and Wyloo Canada Holdings Pty Ltd (together, “Wyloo Metals”) under which Wyloo Metals would acquire up to 100% of the common shares of Noront for C$0.70 in cash pursuant to a statutory plan of arrangement under the Business Corporation Act (Ontario) (the “Wyloo Offer”). The consideration of C$0.70 in cash per share under the Wyloo Offer represents a 192% premium to Noront’s unaffected closing price on May 21, 2021 and a 27% premium to the BHP Western Mining Resources International Pty Ltd (“BHP”) C$0.55 per share offer (the “BHP Offer”).

Under the proposed arrangement agreement between Noront and Wyloo Metals (the “Arrangement Agreement”), Noront shareholders would be entitled to elect to sell all or a portion of their common shares to Wyloo Metals for C$0.70 per share. Shareholders who opt to retain their Noront common shares would continue as common shareholders in the Company going forward.

The Noront Board of Directors, on the basis of a recommendation from independent directors comprising Noront’s Special Committee of the Board of Directors, and supported by advice from external financial and legal advisors, has unanimously determined that the Wyloo Offer constitutes a superior proposal as compared to the outstanding BHP Offer.

Noront CEO, Alan Coutts: “Based on an evaluation by the Special Committee and its advisors, the Noront Board of Directors has determined that Wyloo Metals’ proposal represents superior value for our shareholders, compared to the offer by BHP.”

BHP Right to Match

Pursuant to the terms of the support agreement among Noront, BHP and BHP Lonsdale Investments Pty Ltd (the “Support Agreement”), once the Company has determined that a superior proposal has been received, BHP has the right, but not the obligation, to offer to amend the terms of the BHP Offer. BHP has five business days from receiving notice of the superior proposal in accordance with the terms of the Support Agreement to negotiate with Noront, should BHP decide to do so, to amend the terms of the existing Support Agreement such that the Wyloo Offer is no longer considered by the Noront Board of Directors to be superior to the amended BHP offer. The Noront Board of Directors will, in good faith, review any such amended offer by BHP in order to determine whether such amendment would result in the Wyloo Offer no longer being a superior proposal when assessed against any such amended BHP offer. If BHP does not exercise its right to match within the period provided for in the Support Agreement, the Support Agreement will be terminated in accordance with its terms and the Arrangement Agreement will be immediately entered into by the Company and Wyloo Metals.

If the Arrangement Agreement is entered into, Wyloo Metals has also agreed to provide a loan to Noront of up to C$23 million (the “Wyloo Loan”) to finance, among other things, the termination payment of C$13 million payable to BHP upon the termination of the Support Agreement, as well as other transaction related costs. The term of the Wyloo Loan will be 12 months from completion of the Wyloo transaction, with interest of 5% per annum payable quarterly in either 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 the approval of the TSXV Venture Exchange.

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 37.25% of the Noront common shares.

The terms of the Arrangement Agreement, if executed, will provide that Wyloo Metals will be entitled to a termination payment of C$17 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 in certain circumstances. 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.

Source: Company Press Release