Old API Wind-down Ltd - Ordinary Shares ARLZQ

RE: RE: RE: RE: RE: Will Alamos increase its offer

[goldmember1]

Wha?  Because the Hecla offer is not 100% cash -your going to get some HL shares.  And as Alamos states, what HL will look like after this deal, ..well 

 

Among the reasons why the Alamos offer represents better value than the Hecla offer are the following:

 

• Hecla's offer is highly conditional:
  • The debt financing for the Hecla bid is conditional upon the merger being approved by 66-2/3 per cent of the Aurizon shares voted at a meeting for this purpose. Alamos currently owns 16.1 per cent of the Aurizon shares, and other large shareholders of Aurizon have confirmed to Alamos today that they are not supportive of the Hecla transaction, but will support the Alamos offer, making it impossible for Hecla to get 66-2/3 per cent.
• Possible illegal break fee:
  • The Aurizon board has agreed to pay Hecla a $27.2-million break fee in several scenarios, including where as few as 18 per cent of the Aurizon shares are acquired by Alamos under its existing offer. Alamos intends to challenge this as it believes this may constitute an illegal defensive tactic or be otherwise inconsistent with takeover-bid law in Canada. Aurizon shareholders should be free to determine whether Alamos's offer is superior to the Hecla proposal and should not be improperly constrained from doing so by the Aurizon board.
• Hecla is borrowing heavily against Aurizon to finance the acquisition:
  • Alamos can afford this acquisition, while it appears that Hecla cannot. The company resulting from the Hecla-Aurizon merger proposed by the Aurizon board will have up to $500-million in debt. Under the Alamos offer, the combined company would have no debt.
• Hecla has hedged the gold production of the combined company:
  • Under the terms of its debt financing for this acquisition, Hecla has agreed to hedge at least $450-million of revenues from gold production. This significantly reduces the exposure of Aurizon shareholders to any upside in the gold price. Under the Alamos offer, the combined company would be unhedged.
• Aurizon shareholders will receive Hecla shares:
  • As a result of the proration mechanism under the Hecla offer, it is likely that all Aurizon shareholders tendering to the Hecla offer will receive Hecla shares as consideration, and will not receive cash only.
• Alamos's low-cost production:
  • Alamos believes it is a better low-cost producer with healthy profit margins, earnings, dividends and growth potential.
• Alamos's dividend:
  • The Alamos dividend of 10 cents per share scheduled to be paid in April represents a return of cash to shareholders equal in value on a per-share basis to the difference in announced cash value of the Alamos and Hecla offers of $4.65 and $4.75, respectively.
• Hecla's environmental lawsuit:
  • Hecla was required to pay over $263-million plus interest in damages to settle claims stemming from the release of wastes from its mining operations in Coeur d'Alene, Idaho. The release of wastes polluted the clean water source, damaging the fish and wildlife in the area. Hecla has remaining payments of over $70-million in the next two years as part of the settlement.
• Hecla is not a gold company:
  • The Hecla offer would result in significant silver and base metals exposure to Aurizon shareholders. Roughly 90 per cent of Hecla's resources, on an in situ value basis, are composed of silver and base metals. Moreover, over 80 per cent of Hecla's revenues are from silver and base metals (based on 2012 results). The Hecla offer, if successful, would significantly dilute the exposure of Aurizon shareholders to gold.
• Hecla's negative growth:
  • Since 2009, Hecla has produced less silver year after year, essentially depriving its shareholders from fully participating in a period when commodity prices have been at record highs.
• Hecla's history of missing expectations:
  • Hecla has a history of routinely failing to deliver on targets. In 2012, management provided guidance of seven million ounces of silver at cash costs of between $1.00 per ounce to $2.00 per ounce. Hecla missed on both metrics, producing only 6.4 million ounces of silver at cash costs of $2.70 per ounce. In 2011, despite initially guiding to cash costs of zero, revising guidance upward to $1.00 per ounce in August, 2011, and reiterating it in late November, 2011, Hecla still missed its guidance -- posting cash costs of $1.15 per ounce for 2011.
• Hecla's poor mine management:
  • In early 2012, Hecla was ordered by the United States Department of Labor Mine Safety and Health Administration to place its Lucky Friday mine on care and maintenance. The mine was closed for over a year so that Hecla could remove the sand and concrete buildup on the shaft. Alamos believes the shutdown could have been averted had Hecla exercised proper shaft maintenance over the years.
• Class-action lawsuit against Hecla:
  • Hecla is currently engaged in a class-action lawsuit, which claims that Hecla made false and misleading statements and omitted certain material information related to the operational issues at Lucky Friday.
• Poor safety record of Hecla:
  • In 2011 alone, there were three separate occasions where workers were either killed or injured at Hecla's Lucky Friday mine. The MSHA has fined Hecla on separate occasions over safety issues.