Hecla Announces Intention to Make All Cash Offer to Acquire U.S. Silver Corporation for CDN$1.80 Per Common Share
Highlights of the Proposed Hecla Offer:
All-cash offer of CDN$1.80 for each U.S. Silver common share,
providing significant, immediate and certain value and liquidity to
U.S. Silver common shareholders upon consummation.
Premium of over 23% over the closing price of U.S. Silver common
shares on July 24, 2012 and a premium of 30% over the U.S. Silver
20-day volume weighted average common share price as at July 24, 2012
on the TSX.
Offer for each common share also represents a premium of 28% to the
imputed offer price of CDN$1.41 under the proposed merger with RX Gold
& Silver, as at July 24, 2012.
Simultaneous and inter-conditional offers to acquire each outstanding
common share as well as each U.S. Silver purchase warrant for
CDN$0.205 (its 'in the money? amount).
Offers not subject to financing.
Hecla Offer conditional upon usual matters and upon the RX proposal
NOT proceeding or such transaction otherwise terminating.
Hecla Mining Company (NYSE:HL) ('Hecla?) announced today that it intends
to have an indirect wholly-owned subsidiary make offers to acquire all
of the outstanding common shares of U.S. Silver Corporation ('U.S.
Silver?) for CDN$1.80 per common share in cash and acquire each
outstanding common share purchase warrant for CDN$0.205 (its 'in the
money? amount based on such price per common share) (together, the
'Hecla Offer?).
'Once launched and successful, the all-cash Hecla Offer will provide
certainty of value and immediate liquidity at an attractive valuation
for U.S. Silver shareholders,? said Hecla′s President and Chief
Executive Officer, Phillips S. Baker, Jr. 'We believe that the proposed
transaction with RX Gold & Silver fails to maximize value for U.S.
Silver shareholders and is, by any measure, inferior to the Hecla Offer.?
Hecla Offer Provides Superior Value
Hecla believes the intended Hecla Offer for U.S. Silver will constitute
a 'superior proposal? relative to the proposed U.S. Silver and RX Gold &
Silver transaction for the following reasons:
Hecla′s intended offer to purchase all of the issued and outstanding
common shares of U.S. Silver for CDN$1.80 per share in cash will
represent ?a premium of over 23% to the CDN$1.46 closing price of U.S.
Silver common shares on the TSX on July 24, 2012 and a premium of 28%
to the imputed offer price of CDN$1.41 under the RX Proposal, as at
the same date;
Once successful, the Hecla Offer will eliminate integration and
dilution risk to U.S. Silver shareholders associated with the proposed
merger with RX Gold & Silver and any subsequent capital needs;
Hecla intends to offer to acquire each outstanding common share
purchase warrant for CDN$0.205 (its 'in the money? amount); and
After successful completion of the Hecla Offer, Hecla will offer to
pay holders of U.S. Silver options (vested or not) ?for the
cancellation of their options the greater of: (a) their 'in the money
amount? or (b) CDN$0.01 per option in cash.
Background to the Hecla Offer
In June, the U.S. Silver Board of Directors approved a proposed business
combination between U.S. Silver and RX Gold & Silver. Shareholders of
U.S. Silver are scheduled to vote on the proposed transaction at a
special meeting of U.S. Silver shareholders, currently scheduled for
August 7, 2012.
Early on Monday, July 23, 2012, Hecla approached the Board of Directors
of U.S. Silver to discuss the Hecla Offer and, at that time, expressed a
strong desire to enter into a friendly transaction supported by the
Board of Directors of U.S. Silver at CND$1.80 per common share. Hecla
and U.S. Silver engaged in discussions; however, the two companies were
unable to reach an agreement on how best to proceed on a timely basis.
Given this impasse and the rapidly approaching meetings on the proposed
RX Gold & Silver transaction, Hecla believes it is compelled to make its
offer directly to holders of U.S. Silver common shares and warrants and
provide them with the opportunity to receive what it believes is
superior consideration for their shares.
Further Details of the Hecla Offer
Once launched, the Hecla Offer will constitute two offers: 1) an offer
to purchase all of the outstanding common shares of U.S. Silver for
CDN$1.80 in cash, and 2) an offer to purchase each outstanding common
share purchase warrant for CDN$0.205 (its 'in the money? amount). The
two offers will be inter-conditional and will be made simultaneously.
The offers will not be subject to any financing conditions. ?Hecla has
sufficient cash to pay for the consideration payable under the offers
and associated expenses. At March 31, 2012, Hecla had US$279 million in
cash and equivalents and no bank debt.
The Hecla Offer will commence by way of a newspaper advertisement. A
formal offer and take-over bid circular will then be mailed to holders
of U.S. Silver common shares and warrants as soon as possible, once U.S.
Silver makes a list of holders of shares and a list of holders of
warrants available. Hecla requested such lists on July 25, 2012. ?The
Hecla Offer will be subject to usual and customary conditions, including
receipt of all required regulatory approvals, not less than 66 2/3% of
the U.S. Silver common shares being deposited under the Hecla Offer and
not withdrawn, and Hecla and U.S. Silver not agreeing to proceeding with
the acquisition of U.S. Silver by Hecla by way of a negotiated plan of
arrangement. The Hecla Offer will also be conditional on the RX Gold &
Silver proposal not being approved by the shareholders of U.S. Silver or
such transaction otherwise being terminated and there having been
deposited under the Hecla Offer a sufficient number of common share
purchase warrants such that Hecla may amend the appropriate warrant
indenture to permit a cashless exercise or to cancel the remaining
warrants for their 'in the money? amount.
Although not part of the Hecla Offer, after the successful completion of
the Hecla Offer, Hecla intends to offer the holders of outstanding
options to acquire U.S. Silver common shares the opportunity to cancel
their options in consideration of the greater of the 'in the money
amount? of such option and CDN$0.01.
Further details concerning the Hecla Offer will be included in the
advertisement, formal offer and take-over bid circular. The Hecla Offer
will be open for acceptance for at least 35 days following its
commencement. Hecla expects to mail the bid circular and related
documents related to the Hecla Offer to the holders of U.S. Silver
common shares and warrants in the coming days.
Advisors
Scotiabank is acting as financial advisor to Hecla in connection with
the proposed takeover offer and Aird & Berlis LLP as Hecla′s Canadian
legal counsel.
About Hecla Mining Company
Established in 1891, Hecla Mining Company is a leading low cash cost
silver producer in the U.S. The company has two operating mines and
exploration properties in four world-class silver mining districts in
the U.S. and Mexico.
Cautionary Statements
Statements made which are not historical facts, such as anticipated
payments, litigation outcome, production, sales of assets, exploration
results and plans, prospects and opportunities including reserves,
resources, and mineralization, costs, and prices or sales performance
are 'forward-looking statements' within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as 'may?, 'will?,
'should?, 'expects?, 'intends?, 'projects?, 'believes?, 'estimates?,
'targets?, 'anticipates? and similar expressions are used to identify
these forward-looking statements. Forward-looking statements involve a
number of risks and uncertainties that could cause actual results to
differ materially from those projected, anticipated, expected or
implied. These risks and uncertainties include, but are not limited to,
metals price volatility, volatility of metals production and costs,
environmental and litigation risks, operating risks, project development
risks, political and regulatory risks, labor issues, ability to raise
financing and exploration risks and results. Refer to the company's Form
10-K and 10-Q reports for a more detailed discussion of factors that may
impact expected future results. The company undertakes no obligation and
has no intention of updating forward-looking statements other than as
may be required by law.
Cautionary Statements to Investors on Reserves and Resources
The United States Securities and Exchange Commission permits mining
companies, in their filings with the SEC, to disclose only those mineral
deposits that a company can economically and legally extract or produce.
We use certain terms on this release, such as 'resource,? 'other
resources,? and 'mineralized materials? that the SEC guidelines strictly
prohibit us from including in our filings with the SEC. U.S. investors
are urged to consider closely the disclosure in our Form 10-K and Form
10-Q. You can review and obtain copies of these filings from the SEC's
website at www.sec.gov.
U.S. Silver shareholders with questions about the Hecla Offer can also
contact Hecla′s information agent, MacKenzie Partners Inc., at
1-800-322-2885.
Hecla Mining Company
Sr. Vice President ? CFO
Jim Sabala,
208-209-1255
Direct Main: 1-800-HECLA91 (1-800-432-5291)
hmc-info@hecla-mining.com
www.hecla-mining.com
