Zinifex and Umicore have signed a binding Business Combination and Shareholders’ Agreement (BCSA) to combine their respective zinc smelting and alloying businesses. The combined business will be called Nyrstar and will be the world’s pre-eminent zinc metal producer with operations on four continents, producing some 1.2 Mt/y of zinc and zinc alloys and employing some 4,500 people. It is anticipated that Nyrstar would come into existence during September 2007, subject to Zinifex shareholder approval, which will be sought in July, and the satisfaction of certain other conditions precedent. It is the intention to undertake an initial public offering of shares in the new enterprise at an appropriate time thereafter.
Zinifex and Umicore shares in Nyrstar will be approximately 60% and 40% respectively, reflecting the relative value of the contributed assets. Final shares will still be subject to adjustment at the formation of Nyrstar but it is not expected that there would be any significant difference from the percentages advised above. Until such time as the IPO occurs, however, the initial joint venture will be structured on an equal ownership basis with an appropriate equalization payment being made to Zinifex from debt raised by the joint venture company.
Due to Thai regulations with regard to foreign ownership, Umicore has elected to limit the contribution to Nyrstar of its stake in Padaeng Industry to 24.9%. The parties will seek to transfer Umicore’s remaining interest of 22% in Padaeng Industry to Nyrstar prior to its formation, in line with the regulatory processes in Thailand.
It is the intention of Umicore and Zinifex that Nyrstar would operate as an independent entity from its inception with its own Board of Directors and Executive Committee. The jointly owned company would be incorporated in Belgium and have its head office in London. The chairman elect for Nyrstar is Julien De Wilde, former CEO of Bekaert. Also joining the Nyrstar board as directors elect are Peter Mansell (Chairman of Zinifex) and Karel Vinck (Chairman of Umicore). Further board members will be designated in due course.
As previously advised, Paul Fowler will assume responsibility for the formation of Nyrstar as Chief Executive Officer elect, and will stand down immediately as Chief Operating Officer of Zinifex. Similarly, Heinz Eigner, will relinquish his duties as Controller of the Zinc Specialties business group at Umicore to become Chief Financial Officer elect. Other executive management will be drawn jointly from the two companies.
On Fowler’s departure, Brett Fletcher will take up the position of Chief Operational Officer of Zinifex, effective immediately. Currently the General Manager of the Hobart Smelter, Brett comes to this new role with over 20 years experience in the mining industry. This has included Mine Manager at Broken Hill and General Manager positions at the Rosebery and Century mines.
The Zinifex assets to be contributed are the Hobart (Australia), Port Pirie (Australia), Clarksville (USA) and Budel (Netherlands) smelting and alloying operations as well as its shareholdings in Australian Refined Alloys (Australia) and Genesis Alloys (China). The Umicore assets to be contributed are the Balen (Belgium), Overpelt (Belgium), Auby (France) and GM Metal (France) smelting and alloying operations as well as its shareholdings in, Galva 45 (France), Umicore Yunnan Zinc Alloys (China), Föhl China (China) and 24.9% of Padaeng Industry (Thailand).
Under the terms of the BCSA, both companies have agreed not to pursue competing transactions or to permit due diligence investigations to be undertaken by third parties in relation to the assets planned to be contributed to Nyrstar. However, these restrictions will not apply if either company receives an unsolicited, superior proposal which would prevent the new venture from taking place. If either company solicits a competing proposal or terminates the BCSA as a result of receiving a superior proposal, a break fee of €10 million is payable.