UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14D-1F
TENDER OFFER STATEMENT PURSUANT TO RULE 14d-1(b) UNDER
THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
FALCONBRIDGE LIMITED
(Name of Subject Company)
Ontario, Canada
(Jurisdiction of Subject Company’s Incorporation or Organization)
INCO LIMITED
(Bidder)
Common Shares
(Title of Class of Securities)
453258402
(CUSIP Number of Class of Securities)
Stuart F. Feiner, Esq.
Executive Vice-President, General Counsel & Secretary
145 King Street West, Suite 1500,
Toronto, Ontario M5H 4B7
(416) 361-7511
Executive Vice-President, General Counsel & Secretary
145 King Street West, Suite 1500,
Toronto, Ontario M5H 4B7
(416) 361-7511
(Name, address (including zip code) and telephone number (including area code) of
person(s) authorized to receive notices and communications on behalf of Bidder)
person(s) authorized to receive notices and communications on behalf of Bidder)
Copy to:
James C. Morphy, Esq.
George J. Sampas, Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004-2498
George J. Sampas, Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004-2498
October 24, 2005
(Date tender offer first published, sent or given to security holders)
PART I
INFORMATION REQUIRED TO BE SENT TO SHAREHOLDERS
| 1. | Home Jurisdiction Document. |
| (a) | Offer to Purchase and Circular dated October 24, 2005, including Letter of Transmittal, Notice of Guaranteed Delivery, and Letter to Shareholders. (1) | ||
| (b) | Notice of Extension dated December 14, 2005. |
| 2. | Informational Legends. |
| (a) | See the inside front cover page of the cover page of the Offer to Purchase and Circular dated October 24, 2005. (1) | ||
| (b) | See the inside front cover page of the Notice of Extension dated December 14, 2005. | ||
| (1) | Previously filed with the Registrant’s Form F-8 (File No. 333-129218) filed October 24, 2005. |
This document is important and requires your immediate
attention. If you are in any doubt as to how to deal with it,
you should consult your investment dealer, stockbroker, trust
company manager, bank manager, lawyer or other professional
advisor. No securities regulatory authority has expressed an
opinion about the securities that are the subject of the Offer
and it is an offence to claim otherwise.
The Offer has not been approved by any securities
regulatory authority nor has any securities regulatory authority
passed upon the fairness or merits of the Offer or upon the
adequacy of the information contained in this document. Any
representation to the contrary is an offence.
December 14, 2005
NOTICE OF EXTENSION
by
INCO LIMITED
in respect of its
OFFER TO PURCHASE
all of the outstanding common shares of
FALCONBRIDGE LIMITED
on the basis of, at the election of each holder,
(a) Cdn.$34.00 in cash (the “Cash
Alternative”); or
(b) 0.6713 of a common share of Inco Limited and
Cdn.$0.05 in cash
(the “Share
Alternative”),
for each common share of Falconbridge Limited subject, in
each case, to proration as
described in Inco Limited’s Offer dated October 24,
2005 (the “Original Offer”).
On December 8, 2005, Inco Limited (“Inco” or the
“Offeror”) announced that it would be extending its
Original Offer to purchase all of the issued and outstanding
common shares of Falconbridge Limited (“Falconbridge”)
(together with associated rights issued and outstanding under
the shareholder rights plan of Falconbridge, the
“Falconbridge Shares”) by extending the Expiry Time of
the Offer to 8:00 p.m. (Toronto time) on January 27,
2006.
This notice of extension (the “Notice of Extension”)
should be read in conjunction with the Offer and Circular, dated
October 24, 2005, and the Letter of Transmittal and Notice
of Guaranteed Delivery that accompanied the Offer and Circular,
all the provisions of which are incorporated herein by
reference. Unless the context requires otherwise or unless
otherwise defined, defined terms used in this Notice of
Extension have the same meaning as in the Offer and Circular.
The term “Offer” means the Original Offer as amended
or supplemented by this Notice of Extension.
The Offer has been extended and is now open for acceptance
until 8:00 p.m. (Toronto time) on January 27, 2006
(the “Expiry Time”), unless accelerated, further
extended or withdrawn.
Shareholders who have validly deposited and not withdrawn
their Falconbridge Shares need take no further action to accept
the Offer. Shareholders who wish to accept the Offer must
properly complete and duly execute the Letter of Transmittal
(printed on blue paper) that accompanied the Offer and Circular,
or a facsimile thereof, and deposit it, together with
certificates representing their Falconbridge Shares and all
other documents required by the Letter of Transmittal, in
accordance with the instructions in the Letter of Transmittal.
Alternatively, Shareholders may follow the procedures for
guaranteed delivery set forth in Section 3 of the Offer to
Purchase, “Manner of Acceptance — Procedure for
Guaranteed Delivery”, using the Notice of Guaranteed
Delivery (printed on green paper) that accompanied the Offer and
Circular, or a facsimile thereof. Any Shareholder having
Falconbridge Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee should contact
such person or institution if he or she desires to deposit such
Falconbridge Shares under the Offer.
Questions and requests for assistance may be directed to RBC
Dominion Securities Inc. in Canada or RBC Capital Markets
Corporation in the United States (collectively, the “Dealer
Manager”), CIBC Mellon Trust Company (the
“Depositary”) or MacKenzie Partners, Inc. (the
“Information Agent”). Additional copies of this Notice
of Extension, the Offer and Circular, the Letter of Transmittal
and the Notice of Guaranteed Delivery may also be obtained
without charge from the Dealer Manager, the Depositary or the
Information Agent at their respective addresses shown on the
last page of this document.
This Notice of Extension does not constitute an offer or a
solicitation to any person in any jurisdiction in which such
offer or solicitation is unlawful. The Offer is not being made
to, nor will deposits be accepted from or on behalf of,
Shareholders in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, the Offeror may, in its sole
discretion, take such action as it may deem necessary to extend
the Offer to Shareholders in any such jurisdiction.
The Dealer Manager for the Offer is:
RBC Capital Markets
| In Canada: | In the United States: | |
| RBC Dominion Securities Inc. | RBC Capital Markets Corporation |
NOTICE TO SHAREHOLDERS IN THE UNITED STATES
The Offer is made for the securities of a Canadian issuer by
a Canadian issuer that is permitted, under a multijurisdictional
disclosure system adopted by the United States, to prepare the
Offer and Circular and this Notice of Extension in accordance
with the disclosure requirements of Canada. Prospective
investors should be aware that such requirements are different
from those of the United States. The financial statements
included or incorporated by reference in the Offer and Circular
and this Notice of Extension have been prepared in accordance
with Canadian generally accepted accounting principles, and are
subject to Canadian auditing and auditor independence standards,
and thus may not be comparable to financial statements of United
States companies.
Shareholders in the United States should be aware that the
disposition of Falconbridge Shares and the acquisition of Inco
Shares by them as described herein may have tax consequences
both in the United States and in Canada. Such consequences may
not be fully described in the Circular and such holders are
urged to consult their tax advisors. See Section 21 of the
Circular, “Certain Canadian Federal Income Tax
Considerations”, and Section 23 of the Circular,
“Certain U.S. Federal Income Tax
Considerations”.
The enforcement by Shareholders of civil liabilities under
United States federal securities laws may be affected adversely
by the fact that the Offeror is incorporated under the laws of
Canada, that some or all of its officers and directors may
reside outside the United States, that the Canadian Dealer
Manager for the Offer and some or all of the experts named
herein may reside outside the United States, and that a
substantial portion of the assets of the Offeror and
Falconbridge and the above-mentioned persons are located outside
the United States.
THE SECURITIES OFFERED PURSUANT TO THE OFFER AND CIRCULAR
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR ANY UNITED STATES STATE
SECURITIES COMMISSION NOR HAS THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR ANY UNITED STATES STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFER AND
CIRCULAR OR THIS NOTICE OF EXTENSION. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Shareholders should be aware that, during the period of the
Offer, the Offeror or its affiliates, directly or indirectly,
may bid for or make purchases of the Falconbridge Shares to be
exchanged, or certain related securities, as permitted by
applicable laws or regulations of Canada or its provinces or
territories.
CURRENCY EXCHANGE RATE INFORMATION
In this Notice of Extension, unless otherwise indicated, all
references to “$” or “dollars” refer to
United States dollars and references to “Cdn.$” refer
to Canadian dollars. On December 13, 2005, the exchange
rate for one U.S. dollar expressed in Canadian dollars
based upon the noon buying rate of the Bank of Canada was
Cdn.$1.1520.
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This Notice of Extension and some of the information
incorporated by reference into the Offer and Circular by this
Notice of Extension contain forward-looking statements that are
subject to risks and based on a number of assumptions and other
factors. See “STATEMENTS REGARDING FORWARD-LOOKING
INFORMATION” in the Offer and Circular.
ii
NOTICE OF EXTENSION
December 14, 2005
| TO: | THE HOLDERS OF COMMON SHARES OF FALCONBRIDGE |
By notice to the Depositary and as set forth in this Notice of
Extension, Inco has extended its Original Offer dated
October 24, 2005 to purchase all of the issued and
outstanding Falconbridge Shares other than any Falconbridge
Shares owned directly or indirectly by Inco and including
Falconbridge Shares that may become issued and outstanding after
the date of the Offer but before the Expiry Time upon the
conversion, exchange or exercise of any securities of
Falconbridge that are convertible into or exchangeable or
exercisable for Falconbridge Shares (other than SRP Rights), on
the basis of, at the election of the Shareholder:
| (a) | Cdn.$34.00 in cash in respect of each Falconbridge Share held (the “Cash Alternative”); or | |
| (b) | 0.6713 of an Inco Share and Cdn.$0.05 in cash in respect of each Falconbridge Share held (the “Share Alternative”), |
in each case, as elected by the Shareholder in the applicable
Letter of Transmittal, and subject to pro ration as set out in
the Original Offer.
Except as otherwise set forth in this Notice of Extension, the
terms and conditions of Inco’s offer to purchase the
Falconbridge Shares as previously set forth in the Original
Offer continue to be applicable in all respects and this Notice
of Extension should be read in conjunction with the Offer and
Circular, the Letter of Transmittal and the Notice of Guaranteed
Delivery, the provisions of which are incorporated herein by
reference.
Unless the context requires otherwise or unless otherwise
defined, defined terms used in this Notice of Extension have the
same meaning as in the Offer and Circular. The term
“Offer” means the Original Offer as amended or
supplemented by this Notice of Extension.
| 1. | Extension of the Offer |
Inco has extended the Original Offer by extending the Expiry
Time for the Offer from 8:00 p.m. (Toronto time) on
December 23, 2005 to 8:00 p.m. (Toronto time) on
January 27, 2006. Accordingly, the definition of
“Expiry Date” in the Original Offer is deleted in its
entirety and replaced with the following definition:
| “ | Expiry Date” means January 27, 2006 or such other date as is set out in a notice of variation of the Offer issued at any time and from time to time accelerating or extending the period during which Falconbridge Shares may be deposited under the Offer. |
| 2. | Withdrawal of Deposited Falconbridge Shares |
Except as otherwise provided in Section 4 of the Offer to
Purchase, “Withdrawal Rights”, all deposits of
Falconbridge Shares to the Offer will be irrevocable. Unless
otherwise required or permitted by applicable Laws, any
Falconbridge Shares deposited in acceptance of the Offer may be
withdrawn by or on behalf of the depositing Shareholder:
| (a) | at any time before the Falconbridge Shares have been taken up by Inco pursuant to the Offer; | |
| (b) | if the Falconbridge Shares have not been paid for by Inco within three business days after having been taken up; or | |
| (c) | at any time before the expiration of 10 days from the date upon which either: |
| (i) | a notice of change relating to a change in the information contained in the Offer, as amended from time to time, that would reasonably be expected to affect the decision of a Shareholder to accept or reject the Offer (other than a change that is not within the control of the Offeror or an affiliate of the Offeror, unless it is a change in a material fact relating to the Inco Shares), in the event that such change occurs at or before the Expiry Time or after the Expiry Time but before the expiry of all rights of withdrawal in respect of the Offer; or | |
| (ii) | a notice of variation concerning a variation in the terms of the Offer (other than a variation consisting solely of an increase in the consideration offered for the Falconbridge Shares where the Expiry Time is not extended for more than 10 days); |
1
| is mailed, delivered, or otherwise properly communicated, but subject to abridgement of that period pursuant to such order or orders as may be granted by applicable courts or securities regulatory authorities and only if such Deposited Shares have not been taken up by the Offeror at the date of the notice. |
Withdrawals may not be rescinded and any Falconbridge Shares
properly withdrawn will thereafter be deemed not validly
deposited for the purposes of the Offer. However, withdrawn
Falconbridge Shares may be re-deposited at any subsequent time
prior to the Expiry Time by again following any of the
procedures described in Section 3 of the Offer to Purchase,
“Manner of Acceptance”.
Shareholders are referred to Section 4 of the Offer to
Purchase, “Withdrawal Rights”, for a description of
the procedures for exercising the right to withdraw Falconbridge
Shares deposited under the Offer.
| 3. | Take Up of and Payment for Deposited Falconbridge Shares |
Upon the terms and subject to the conditions of the Offer
(including, without limitation, the conditions specified in
Section 5 of the Offer to Purchase, “Conditions of the
Offer”, and, if the Offer is further extended or varied,
the terms and conditions of any such extension or variation),
Inco will take up Falconbridge Shares validly deposited under
the Offer and not withdrawn pursuant to Section 4 of the
Offer to Purchase, “Withdrawal Rights”, not later than
10 calendar days after the Expiry Time and will pay for the
Falconbridge Shares taken up as soon as possible, but in any
event not later than three business days after taking up the
Falconbridge Shares. Any Falconbridge Shares deposited under the
Offer after the date on which Inco first takes up Falconbridge
Shares will be taken up and paid for not later than
10 calendar days after such deposit.
Shareholders are referred to Section 6 of the Offer to
Purchase, “Take Up of and Payment for Deposited
Shares”, for details as to the take up of and payment
for Falconbridge Shares under the Offer.
| 4. | Recent Developments |
Regulatory Clearances
Inco and Falconbridge each received a request dated
November 16, 2005 for additional information, commonly
referred to as a “second request”, from the Antitrust
Division of the U.S. Department of Justice
(“DOJ”) in connection with the Offer. Inco and
Falconbridge have been working with the DOJ staff since shortly
after the announcement of the Original Offer on October 11,
2005 and anticipated the issuance of the second request as part
of that process given the nature and size of the proposed
combination of Inco and Falconbridge following the successful
completion of the Offer.
The effect of the second request is to extend the waiting period
under the U.S. Hart-Scott-Rodino Antitrust Improvements Act
of 1976 beyond the initial waiting period, which ended
November 16, 2005, until 30 days after both Inco and
Falconbridge have substantially complied with the second
request, unless the waiting period is terminated earlier by the
DOJ or extended voluntarily by Inco and Falconbridge.
Inco and Falconbridge are responding to the second request, and
continue to work with the DOJ and the competition authorities in
Europe and Canada in connection with the review by these
authorities of the Offer.
Recent Nickel Market and Other Developments
The London Metal Exchange (LME) benchmark cash nickel price
has averaged $12,490 per tonne ($5.67 per pound) for
the fourth quarter of 2005 through December 14, 2005, as
compared with a third quarter 2005 average of $14,567 per
tonne ($6.61 per pound). For the month of December 2005
through December 14, 2005, the LME cash nickel price has
averaged $13,495 per tonne ($6.12 per pound) and was
$13,920 per tonne ($6.31 per pound) on December 14, 2005.
Inco believes that the decline in the LME cash nickel price
during the third quarter of 2005 and for most of the first two
months of the fourth quarter of 2005 was due principally to an
oversupply of nickel-containing stainless steel, the principal
end-use for primary nickel. This condition resulted in stainless
steel production cutbacks intended to correct the build-up of
inventory of stainless steel. While this oversupply situation in
the stainless steel industry has had a short-term effect on
nickel prices, Inco currently believes that overall nickel
market fundamentals remain relatively strong. Inco has recently
seen some signs of the end of this stainless steel inventory
correction. A number of leading economic indicators remain
positive and Inco currently expects that, once this stainless
steel inventory correction has run its course, stainless steel
production growth should resume in early 2006. Non-stainless
steel markets for nickel continue to show very favourable
growth. Demand in non-stainless steel applications such as for
aerospace in the United States and Europe and plating in China
continues to be extremely strong. Growth in these
2
markets has also been enhanced by increased activity in those
end-uses for nickel relating to oil and gas and liquid natural
gas exploration and production and hybrid automobiles. Nickel
supply growth has continued to be slow as recent production
disruptions have curtailed output from several producers, and
nickel producer inventories remain at historically low levels.
The LME benchmark cash copper price has averaged $4,227 per
tonne ($1.92 per pound) for the fourth quarter of 2005
through December 14, 2005, as compared with a third quarter
2005 average of $3,753 per tonne ($1.70 per pound). For the
month of December 2005 through December 14, 2005, the LME
cash copper price has averaged $4,568 per tonne ($2.07 per
pound). A new record LME cash price of $4,405 per tonne ($2.00
per pound) was set on November 18, 2005. Having exceeded
$4,405 for the first time, the LME cash copper price has
remained above or near this threshold for a number of days
through December 14, 2005 and the LME cash price for copper
was $4,582 per tonne ($2.08 per pound) on December 14, 2005.
Copper prices continue to be driven by strong demand, critically
low inventories, supply constraints, operating disruptions and
strong fund interest in copper. Demand has been supported by
ongoing economic growth in the United States, notwithstanding
the recent difficult hurricane season. Demand for copper and
copper products is expected to remain strong over the next
18 months driven by rebuilding of housing and electrical
infrastructure in the geographic region of the United States
adversely affected by the latest hurricane season. Outlook for
copper demand in China and India remains strong.
Inco believes that the world’s refined copper production
capacity expansions currently in the planning pipeline will be
barely sufficient to meet forecast demand. This supply-demand
balance would imply high utilization rates for existing
operations, low levels of inventory and volatile copper prices
in the event of unexpected supply disruptions over the next few
years.
Benchmark prices for certain of the platinum-group metals
reached multi-year highs during early December 2005. Platinum
futures prices for January 2006 reached $1,026 per ounce on
the New York Mercantile Exchange (NYMEX) in early December 2005,
the highest benchmark price for platinum since March 1980, with
the NYMEX spot platinum price averaging about $1,000 per
ounce for the month of December 2005 through December 13,
2005. Palladium spot prices on the NYMEX rose to 20-month highs
in early December 2005.
Management’s expectations with respect to nickel prices,
the resumption of stainless steel production growth and demand
for copper and copper products are subject to various risks and
assumptions. See “STATEMENTS REGARDING FORWARD-LOOKING
INFORMATION” in the Offer and Circular.
Goro Project
As of the end of November, 2005, the engineering work required
for the construction of the Goro project in New Caledonia was
approximately 64% complete. Construction on site, including
earthworks, foundation work and work on the port facilities, has
proceeded, subject to delays in the receipt of certain permits
required for construction, largely on schedule. Inco currently
expects that, subject to the effect of certain developments
referred to below, start-up of the project will be in late 2007.
The project continues to experience cost pressures related
principally to commodities and other materials required for
construction, including for fuel and hydrocarbon-based products.
Taking into account the cost pressures for such construction
materials and other input costs, the currently anticipated
trends in such costs and the latest regulatory requirements for
the configuration of the project’s tailings area, Inco
currently believes that, if it were to formally update its
latest forecast for the capital cost for Goro’s mine,
process plant and infrastructure of $1.878 billion with a
-5% plus 15% confidence level, such updated forecast would be
expected to be at the high end of the plus 15% confidence level.
As part of its ongoing work on the project, Inco has implemented
a number of systems to monitor all key costs trends which could
affect the capital cost forecast. Inco currently expects to be
in a position to have a definitive cost estimate, reflecting all
relevant factors at that time, and which is currently expected
to be subject to a confidence or accuracy level developed as
part of that estimate, sometime in the second quarter of 2006
when engineering will have been at least 80% complete and all
major construction contracts will have been awarded.
There have been a number of recent boycotts and other related
actions in New Caledonia that have affected the operations of
Eramet and its subsidiary, Société Le Nickel (SLN),
and other businesses there as a result of labour and other
disruptions and other developments. While those actions and
developments have not to date affected the
3
construction of the Goro project to any significant degree, they
could have a substantial adverse effect on the project’s
construction schedule and capital costs if these disruptions
were to continue for any extended length of time.
Management’s capital cost estimates for the Goro project
are subject to various risks and assumptions. See
“STATEMENTS REGARDING FORWARD-LOOKING INFORMATION” in
the Offer and Circular.
Falconbridge’s Koniambo Project
Falconbridge has recently submitted a proposal to the current
majority shareholder in this project, the Société
Minière du Sud Pacifique (SMSP), covering the proposed
terms for the ongoing development of its Koniambo project. SMSP
is currently considering this proposal and both SMSP and
Falconbridge are currently in discussions with other interested
parties directed towards reaching agreement on the key terms and
conditions that would enable this project to proceed and meet
the requirements of Falconbridge and the other interested
parties and the relevant accords applicable to the project.
Other
Since the Offer and Circular were delivered to Shareholders,
Inco has filed an application with the NYSE to list the Inco
Shares to be issued in connection with the Offer.
| 5. | Revised Selected Inco Pro Forma Consolidated Financial Information |
The following is an updated version of, and replacement for, the
selected pro forma consolidated financial information contained
in the Summary of the Offer and Circular and should be read in
conjunction with Inco’s and Falconbridge’s unaudited
pro forma consolidated financial statements, the accompanying
notes thereto and the compilation report of
PricewaterhouseCoopers LLP thereon, included in this Notice of
Extension. The pro forma consolidated balance sheet has been
prepared from the unaudited consolidated balance sheet of the
Offeror as at September 30, 2005 and gives pro forma effect
to the successful completion of the Offer (including any
Compulsory Acquisition or Subsequent Acquisition Transaction) as
if the transactions occurred on September 30, 2005. The pro
forma consolidated statements of earnings for the year ended
December 31, 2004 and the nine month period ended
September 30, 2005 have been prepared, respectively, from
the audited consolidated statement of earnings of the Offeror
for the year ended December 31, 2004 and the unaudited
interim consolidated statement of earnings of the Offeror for
the nine month period ended September 30, 2005 and
gives pro forma effect to the successful completion of the Offer
(including any Compulsory Acquisition or Subsequent Acquisition
Transaction) as if the transactions occurred on January 1,
2004.
The selected pro forma consolidated financial information is not
intended to be indicative of the results that would actually
have occurred, or the results expected in future periods, had
the events reflected herein occurred on the dates indicated.
Actual amounts recorded upon consummation of the transactions
contemplated by the Offer will differ from the pro forma
information presented below. The pro forma consolidated
financial information does not reflect (1) any special
items such as payments pursuant to change of control provisions
or integration costs which may be incurred as a result of the
acquisition, and does not give effect to operating efficiencies,
cost savings and synergies that are expected to result from the
acquisition, or (2) the impact of undertakings that Inco is
prepared, if required, to make in order to address regulatory
clearance requirements, as there are no current agreements
providing for implementation of such undertakings which,
however, are expected to be carried out after the completion of
the Offer.
| Nine Months Ended | Year Ended | |||||||||||||||
| September 30 | December 31 | |||||||||||||||
| Inco | Pro forma | Inco | Pro forma | |||||||||||||
| (in millions of U.S.$) | 2005 | 2005 | 2004 | 2004 | ||||||||||||
|
Statement of Earnings Data
|
||||||||||||||||
|
Revenues
|
$ | 3,389 | $ | 9,468 | $ | 4,326 | $ | 11,304 | ||||||||
|
Total costs and operating expenses
|
2,392 | 7,537 | 3,170 | 9,261 | ||||||||||||
|
Earnings before minority interest
|
659 | 1,257 | 731 | 1,363 | ||||||||||||
|
Minority interest
|
69 | 95 | 126 | 169 | ||||||||||||
|
Net earnings
|
590 | 1,162 | 605 | 1,194 | ||||||||||||
4
| As at September 30 | ||||||||
| Inco | Pro forma | |||||||
| (in millions of U.S.$) | 2005 | 2005 | ||||||
|
Balance Sheet Data
|
||||||||
|
Cash and cash equivalents
|
$ | 916 | $ | 1,628 | ||||
|
Other current assets
|
1,563 | 4,189 | ||||||
|
Property, plant and equipment and other non-current assets
|
8,924 | 26,574 | ||||||
|
Current liabilities excluding current portion of long-term debt
|
994 | 2,131 | ||||||
|
Total
debt(1)
|
1,782 | 8,279 | ||||||
|
Minority interest
|
781 | 1,163 | ||||||
|
Total shareholders’ equity
|
4,891 | 13,533 | ||||||
| (1) | Included in long-term debt are $750 million of junior preference shares intended to be refinanced subsequent to the acquisition of control of Falconbridge by Inco. |
See Note 3 to the unaudited pro forma consolidated
financial statements included in this Notice of Extension for
the pro forma assumptions and adjustments given effect to
in the foregoing selected pro forma consolidated financial
information.
| 6. | Documents Incorporated by Reference |
Since the Offer and Circular were delivered to Shareholders, the
following documents of Falconbridge have been filed with the
securities regulatory authority in each of the provinces and
territories of Canada and are specifically incorporated by
reference into, and form an integral part of, the Circular:
| (a) | the unaudited consolidated financial statements of Falconbridge, including notes thereto, as at September 30, 2005 and for the three and nine-month periods ended September 30, 2005 and 2004; and | |
| (b) | management’s discussion and analysis of financial condition and results of operations of Falconbridge for the three and nine-month periods ended September 30, 2005. |
Inco understands that copies of documents incorporated by
reference in the Offer regarding Falconbridge may be obtained on
request without charge from Falconbridge’s Secretary at 181
Bay Street, Suite 200, BCE Place, Toronto, Ontario, Canada,
M5J 2T3, telephone: 416-982-7111. Copies of documents
incorporated by reference may also be obtained by accessing the
websites located at www.sedar.com and www.sec.gov.
| 7. | Variations to the Original Offer |
The Offer and Circular, the Letter of Transmittal and the Notice
of Guaranteed Delivery shall be read together with this Notice
of Extension in order to give effect to the variations in the
terms and conditions of the Offer and the changes in information
to the Offer and Circular set forth in this Notice of Extension.
| 8. | Offerees’ Statutory Rights |
Securities legislation in certain of the provinces and
territories of Canada provides Shareholders with, in addition to
any other rights they may have at law, rights of rescission or
damages, or both, if there is a misrepresentation in a circular
or a notice that is required to be delivered to such
securityholders. However, such rights must be exercised within
prescribed time limits. Shareholders should refer to the
applicable provisions of the securities legislation of their
province or territory for particulars of those rights or consult
with a lawyer.
| 9. | Registration Statement Filed with the SEC |
A Registration Statement on Form F-8 under the
U.S. Securities Act has been filed, which covers the Inco
Shares to be issued pursuant to the Offer. The Offer and
Circular do not contain all of the information set forth in the
Registration Statement. Reference is made to the Registration
Statement and the exhibits thereto for further information. In
addition to the documents listed under the heading,
“Documents Filed as Part of the Registration
Statement” on page 64 of the Offer and Circular (which
section is separate from and not part of the “Experts”
section
5
that immediately precedes it), the following documents have been
filed with the SEC as part of the Registration Statement on
Form F-8:
| • | The documents incorporated by reference under the heading, “Falconbridge — Documents Incorporated by Reference” in the Offer and Circular; | |
| • | The documents incorporated by reference under the heading, “Documents Incorporated by Reference” in this Notice of Extension; and | |
| • | The Report of a Take-Over Bid dated October 24, 2005. |
| 10. | Directors’ Approval |
The contents of this Notice of Extension have been approved, and
the sending of this Notice of Extension to the Shareholders has
been authorized, by the Board of Directors of Inco.
6
AUDITORS’ CONSENT
We have read the Notice of Extension of Inco Limited dated
December 14, 2005 relating to the offer by Inco Limited to
purchase all of the issued and outstanding common shares of
Falconbridge Limited. We have complied with Canadian generally
accepted standards for an auditor’s involvement with
offering documents.
We consent to the use in the Notice of Extension of our
compilation report dated December 14, 2005 to the Board of
Directors of Inco Limited on the pro forma consolidated balance
sheet as at September 30, 2005 and the pro forma
consolidated statements of earnings for the nine months then
ended and for the year ended December 31, 2004.
| Toronto, Ontario | (Signed) PricewaterhouseCoopers llp |
| December 14, 2005 | Chartered Accountants |
7
CERTIFICATE
The foregoing, together with the Offer and Circular dated
October 24, 2005, contains no untrue statement of a
material fact and does not omit to state a material fact that is
required to be stated or that is necessary to make a statement
not misleading in the light of the circumstances in which it was
made. For the purpose of the Province of Québec, the
foregoing does not contain any misrepresentation likely to
affect the value or the market price of the securities to be
distributed.
Dated: December 14, 2005
| By: (Signed) Scott M. Hand | By: (Signed) Robert D.J. Davies | |
| Chairman and Chief Executive Officer |
Executive Vice President and Chief Financial Officer |
|
| By: (Signed) Chaviva Hosek | By: (Signed) Janice K. Henry | |
| Director | Director | |
C-1
NOTE: The following compilation report is provided
solely in order to comply with applicable requirements of
Canadian securities laws. It should be noted that to report in
accordance with Public Company Accounting Oversight Board
Auditing Standards (PCAOBAS) on a compilation of pro forma
financial statements an examination greater in scope than that
performed under Canadian standards would be required.
December 14, 2005
COMPILATION REPORT ON PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS
To the Board of Directors of Inco Limited
We have read the accompanying unaudited pro forma consolidated
balance sheet of Inco Limited (the “Company”) as at
September 30, 2005 and unaudited pro forma consolidated
statements of earnings for the nine months then ended and for
the year ended December 31, 2004, and have performed the
following procedures.
| 1. | Compared the figures in the columns captioned “Inco” to the unaudited consolidated financial statements of the Company as at September 30, 2005 and for the nine months then ended, and the audited consolidated financial statements of the Company for the year ended December 31, 2004, respectively, and found them to be in agreement after considering the adjustments required for the change in accounting policy as described in note 2. | |
| 2. | Compared the figures in the columns captioned “Falconbridge” to the unaudited consolidated financial statements of Falconbridge Limited as at September 30, 2005 and for the nine months then ended and the audited consolidated financial statements of Noranda Inc. for the year ended December 31, 2004, respectively, and found them to be in agreement after considering the adjustments required for the change in accounting policy as described in note 2. | |
| 3. | Made enquiries of certain officials of the Company who have responsibility for financial and accounting matters about: |
| (a) | the basis for determination of the pro forma adjustments; and | |
| (b) | whether the pro forma consolidated financial statements comply as to form in all material respects with the regulatory requirements of the various Securities Commissions and similar regulatory authorities in Canada. |
The officials:
| (a) | described to us the basis for determination of the pro forma adjustments, and | |
| (b) | stated that the pro forma consolidated financial statements comply as to form in all material respects with the regulatory requirements of the various Securities Commissions and similar regulatory authorities in Canada. |
| 4. | Read the notes to the pro forma consolidated financial statements, and found them to be consistent with the basis described to us for determination of the pro forma adjustments. | |
| 5. | Recalculated the application of the pro forma adjustments to the aggregate of the amounts in the columns captioned “Inco” and “Falconbridge” as at September 30, 2005 and for the nine months then ended, and for the year ended December 31, 2004, and found the amounts in the column captioned “Pro forma Inco” to be arithmetically correct. |
A pro forma financial statement is based on management
assumptions and adjustments which are inherently subjective. The
foregoing procedures are substantially less than either an audit
or a review, the objective of which is the expression of
assurance with respect to management’s assumptions, the pro
forma adjustments, and the application of the adjustments to the
historical financial information. Accordingly, we express no
such assurance. The foregoing procedures would not necessarily
reveal matters of significance to the pro forma consolidated
financial statements, and we therefore make no representation
about the sufficiency of the procedures for the purposes of a
reader of such statements.
(Signed)
PricewaterhouseCoopers LLP
Chartered Accountants
Toronto, Ontario
F-1
The following selected unaudited pro forma consolidated
financial information is presented for illustrative purposes
only and is not necessarily indicative of the operating results
or financial condition of the consolidated entities that would
have been achieved if the Offer had been completed during the
periods presented, nor is the selected pro forma consolidated
financial information necessarily indicative of the future
operating results or financial position of the consolidated
entities. The pro forma consolidated financial information does
not reflect (1) any special items such as payments pursuant
to change of control provisions or integration costs which may
be incurred as a result of the acquisition, and does not
give effect to operating efficiencies, cost savings and
synergies that are expected to result from the acquisition, or
(2) the impact of undertakings that Inco is prepared, if
required, to make in order to address regulatory clearance
requirements, as there are no current agreements providing for
implementation of such undertakings which, however, are expected
to be carried out after the completion of the Offer.
INCO LIMITED
PRO FORMA CONSOLIDATED BALANCE SHEET
As at September 30, 2005
(unaudited)
(millions of US dollars)
| Pro Forma | |||||||||||||||||
| Adjustments | Pro Forma | ||||||||||||||||
| Inco | Falconbridge | (Note 3(a)) | Inco | ||||||||||||||
| ASSETS | |||||||||||||||||
|
Current assets
|
|||||||||||||||||
|
Cash and cash equivalents
|
$ | 916 | $ | 692 | $ | 20 | $ | 1,628 | |||||||||
|
Accounts receivable
|
580 | 853 | 27 | 1,460 | |||||||||||||
|
Inventories
|
869 | 1,508 | 238 | 2,615 | |||||||||||||
|
Other
|
114 | — | — | 114 | |||||||||||||
|
Total current assets
|
2,479 | 3,053 | 285 | 5,817 | |||||||||||||
|
Property, plant and equipment and other non-current assets
|
8,924 | 8,658 | 8,992 | 26,574 | |||||||||||||
|
Total assets
|
$ | 11,403 | $ | 11,711 | $ | 9,277 | $ | 32,391 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||
|
Current liabilities
|
|||||||||||||||||
|
Long-term debt due within one year
|
$ | 113 | $ | 103 | $ | 1,113 | $ | 1,329 | |||||||||
|
Other current liabilities
|
994 | 1,137 | — | 2,131 | |||||||||||||
|
Total current liabilities
|
1,107 | 1,240 | 1,113 | 3,460 | |||||||||||||
|
Other liabilities
|
|||||||||||||||||
|
Long-term
debt(1)
|
1,669 | 3,799 | 1,482 | 6,950 | |||||||||||||
|
Deferred income and mining taxes
|
1,983 | 1,151 | 1,791 | 4,925 | |||||||||||||
|
Other long-term liabilities
|
972 | 695 | 693 | 2,360 | |||||||||||||
|
Total liabilities
|
5,731 | 6,885 | 5,079 | 17,695 | |||||||||||||
|
Minority interest
|
781 | 56 | 326 | 1,163 | |||||||||||||
| Shareholders’ equity | |||||||||||||||||
|
Convertible debt
|
398 | — | — | 398 | |||||||||||||
|
Common shareholders’ equity
|
|||||||||||||||||
|
Common shares issued and outstanding
|
2,933 | 4,231 | 4,376 | 11,540 | |||||||||||||
|
Preferred shares
|
— | 326 | (326 | ) | — | ||||||||||||
|
Warrants
|
62 | — | — | 62 | |||||||||||||
|
Contributed surplus
|
578 | 52 | (17 | ) | 613 | ||||||||||||
|
Retained earnings
|
920 | (84 | ) | 84 | 920 | ||||||||||||
|
Currency translation account
|
— | 245 | (245 | ) | — | ||||||||||||
| 4,493 | 4,770 | 3,872 | 13,135 | ||||||||||||||
|
Total shareholders’ equity
|
4,891 | 4,770 | 3,872 | 13,533 | |||||||||||||
|
Total liabilities and shareholders’ equity
|
$ | 11,403 | $ | 11,711 | $ | 9,277 | $ | 32,391 | |||||||||
| (1) | Included in long-term debt are $750 million of junior preference shares intended to be refinanced subsequent to the acquisition of control of Falconbridge by Inco. |
F-2
INCO LIMITED
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
Nine months ended September 30, 2005
(unaudited)
(millions of US dollars)
| Pro Forma | Pro Forma | ||||||||||||||||||||
| Inco | Falconbridge | Adjustments | Note 3 | Inco | |||||||||||||||||
|
Revenues
|
|||||||||||||||||||||
|
Net sales
|
$ | 3,397 | $ | 6,074 | $ | — | $ | 9,471 | |||||||||||||
|
Other income, net
|
(8 | ) | 5 | — | (3 | ) | |||||||||||||||
| 3,389 | 6,079 | — | 9,468 | ||||||||||||||||||
|
Cost and operating expenses (income)
|
|||||||||||||||||||||
|
Cost of sales and other operating expenses, excluding
depreciation, depletion and amortization
|
1,907 | 4,316 | (37 | ) | b, c, f | 6,186 | |||||||||||||||
|
Depreciation, depletion and amortization
|
187 | 405 | 133 | d | 725 | ||||||||||||||||
|
Selling, general and administrative
|
156 | 54 | 13 | e | 223 | ||||||||||||||||
|
Research, development and exploration
|
53 | 43 | — | 96 | |||||||||||||||||
|
Currency translation adjustment
|
48 | — | — | 48 | |||||||||||||||||
|
Interest expense
|
16 | 126 | 92 | g | 234 | ||||||||||||||||
|
Asset impairment charge
|
25 | — | — | 25 | |||||||||||||||||
| 2,392 | 4,944 | 201 | 7,537 | ||||||||||||||||||
|
Earnings before income and mining taxes and
minority interest
|
997 | 1,135 | (201 | ) | 1,931 | ||||||||||||||||
|
Income and mining taxes
|
338 | 389 | (53 | ) | i | 674 | |||||||||||||||
|
Earnings before minority interest
|
659 | 746 | (148 | ) | 1,257 | ||||||||||||||||
|
Minority interest
|
69 | 154 | (128 | ) | h | 95 | |||||||||||||||
|
Net earnings
|
590 | 592 | (20 | ) | 1,162 | ||||||||||||||||
|
Dividends on preferred shares
|
— | 12 | (12 | ) | j | — | |||||||||||||||
|
Net earnings applicable to common shares
|
$ | 590 | $ | 580 | $ | (8 | ) | $ | 1,162 | ||||||||||||
|
Net earnings per common share
|
|||||||||||||||||||||
|
Basic
|
$ | 3.12 | $ | 3.02 | |||||||||||||||||
|
Diluted
|
$ | 2.70 | $ | 2.80 | |||||||||||||||||
F-3
INCO LIMITED
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
Year ended December 31, 2004
(unaudited)
(millions of US dollars)
| Pro Forma | Pro Forma | ||||||||||||||||||||
| Inco | Falconbridge | Adjustments | Note 3 | Inco | |||||||||||||||||
|
Revenues
|
|||||||||||||||||||||
|
Net sales
|
$ | 4,278 | $ | 6,978 | $ | — | $ | 11,256 | |||||||||||||
|
Other income, net
|
48 | — | — | 48 | |||||||||||||||||
| 4,326 | 6,978 | — | 11,304 | ||||||||||||||||||
|
Cost and operating expenses (income)
|
|||||||||||||||||||||
|
Cost of sales and other operating expenses, excluding
depreciation, depletion and amortization
|
2,348 | 5,099 | (56 | ) | b, c, f | 7,391 | |||||||||||||||
|
Depreciation, depletion and amortization
|
248 | 499 | 205 | d | 952 | ||||||||||||||||
|
Selling, general and administrative
|
192 | 66 | 18 | e | 276 | ||||||||||||||||
|
Research, development and exploration
|
61 | 47 | — | 108 | |||||||||||||||||
|
Currency translation adjustment
|
85 | — | — | 85 | |||||||||||||||||
|
Interest expense
|
36 | 122 | 124 | g | 282 | ||||||||||||||||
|
Asset impairment charge/(gain) on settlement
|
201 | (33 | ) | — | 168 | ||||||||||||||||
|
Goro project suspension costs, net
|
(1 | ) | — | — | (1 | ) | |||||||||||||||
| 3,170 | 5,800 | 291 | 9,261 | ||||||||||||||||||
|
Earnings before income and mining taxes and
minority interest
|
1,156 | 1,178 | (291 | ) | 2,043 | ||||||||||||||||
|
Income and mining taxes
|
425 | 333 | (78 | ) | i | 680 | |||||||||||||||
|
Earnings before minority interest
|
731 | 845 | (213 | ) | 1,363 | ||||||||||||||||
|
Minority interest
|
126 | 297 | (254 | ) | h | 169 | |||||||||||||||
|
Net earnings
|
605 | 548 | 41 | 1,194 | |||||||||||||||||
|
Dividends on preferred shares
|
— | 20 | (20 | ) | j | — | |||||||||||||||
|
Net earnings applicable to common shares
|
$ | 605 | $ | 528 | $ | 61 | $ | 1,194 | |||||||||||||
|
Net earnings per common share
|
|||||||||||||||||||||
|
Basic
|
$ | 3.23 | $ | 3.11 | |||||||||||||||||
|
Diluted
|
$ | 2.86 | $ | 3.00 | |||||||||||||||||
F-4
INCO LIMITED
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(millions of US dollars, except per share amounts)
| 1. | BASIS OF PRESENTATION |
| The unaudited pro forma consolidated financial statements of Inco Limited (“Inco”) have been prepared in accordance with generally accepted accounting principles in Canada. These unaudited pro forma consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Inco as at and for the year ended December 31, 2004 and the unaudited interim consolidated financial statements of Inco as at and for the nine months ended September 30, 2005, including the related notes thereto. | |
| The unaudited pro forma consolidated financial statements have been prepared assuming that the acquisition of Falconbridge Limited (“Falconbridge”) had been completed as of January 1, 2004 for the consolidated statements of earnings and as of September 30, 2005 for the consolidated balance sheet. | |
| These unaudited pro forma consolidated financial statements are not intended to reflect the financial position and results of operations which would have actually resulted had the transaction and other adjustments been effected on the dates indicated. Further, the pro forma results of operations are not necessarily indicative of the results of operations that may be obtained by Inco in the future. |
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| The unaudited pro forma consolidated financial statements have been compiled using the significant accounting policies as set out in the audited consolidated financial statements of Inco for the year ended December 31, 2004 and the unaudited interim consolidated financial statements of Inco for the nine months ended September 30, 2005. | |
| The 2004 consolidated statements of earnings have been restated to reflect the adoption of Canadian Institute of Chartered Accountants Section 3860, Financial Instruments — Disclosure and Presentation, on a retroactive basis. The revisions relate to the accounting for instruments for which the issuer has the right to settle in cash or its own shares. Consistent with this change, interest expense is recorded in lieu of accretion charges with respect to these convertible debt securities. |
| 3. | PRO FORMA ADJUSTMENTS AND ASSUMPTIONS |
| The pro forma consolidated financial statements include the following pro forma assumptions and adjustments: |
| (a) | The acquisition is accounted for using the purchase method of accounting, whereby Falconbridge’s assets and liabilities are revalued to their fair value and its shareholders’ equity is eliminated. Inco’s assets and liabilities are not revalued. The pro forma adjustments reflect Inco’s acquisition of 100 per cent of Falconbridge’s net assets at their fair values as at September 30, 2005 and the accounting for Falconbridge as a wholly-owned subsidiary. Falconbridge’s interest in joint ventures in which it has joint control are reflected using the proportionate consolidation method. |
| The determination of the purchase price, based on management’s preliminary estimate, is as follows: |
| Purchase Price | ||||
|
Consideration in Inco common shares
|
$ | 8,607 | ||
|
Consideration in Inco options issued
|
35 | |||
|
Cash
|
2,407 | |||
|
Transaction costs
|
75 | |||
|
Total
|
$ | 11,124 | ||
| The purchase price was calculated using a price of $43.95 for each Inco common share issued. The cash portion of the purchase price will be financed through committed loan facilities. |
F-5
| The allocation of the purchase price, based on management’s preliminary estimate, is as follows: | |
| Allocation of Purchase Price |
| Fair Value | Purchase Price | |||||||||||
| Book Value | Increment | Allocation | ||||||||||
|
Assets
|
||||||||||||
|
Cash and cash equivalents
|
$ | 787 | $ | — | $ | 787 | ||||||
|
Accounts receivable
|
853 | 27 | 880 | |||||||||
|
Inventories
|
1,508 | 238 | 1,746 | |||||||||
|
Property, plant and equipment and other non-current assets
|
8,658 | 8,992 | 17,650 | |||||||||
|
Total assets
|
$ | 11,806 | $ | 9,257 | $ | 21,063 | ||||||
|
Liabilities
|
||||||||||||
|
Long-term debt due within one year
|
$ | 103 | $ | — | $ | 103 | ||||||
|
Other current liabilities
|
1,137 | — | 1,137 | |||||||||
|
Long-term debt
|
3,799 | 188 | 3,987 | |||||||||
|
Deferred income and mining taxes
|
1,151 | 1,791 | 2,942 | |||||||||
|
Other long-term liabilities
|
695 | 693 | 1,388 | |||||||||
|
Minority interest
|
382 | — | 382 | |||||||||
|
Total liabilities
|
$ | 7,267 | $ | 2,672 | $ | 9,939 | ||||||
|
Total net assets purchased
|
$ | 4,539 | $ | 6,585 | $ | 11,124 | ||||||
| The book value of Falconbridge, as shown above: |
| • | Reflects Falconbridge’s stated book values as at September 30, 2005; and | |
| • | Reflects the assumed exercise of vested stock options. |
| This allocation is based upon preliminary estimates and certain assumptions with respect to the fair value increment associated with the assets to be acquired and the liabilities to be assumed. The actual fair values of the assets and liabilities will be determined as of the date of acquisition and may differ materially from the amounts disclosed above in the assumed pro forma purchase price allocation due to the change in fair values of the assets and liabilities between September 30, 2005 and the date of the transaction, and as further analysis is completed. The actual allocation of the purchase price may result in different adjustments being expensed in the consolidated statement of earnings. |
| (b) | The increase in cost of sales and other operating expenses reflects the elimination of deferred gains on derivative contracts on the pro forma consolidated statements of earnings. The deferred gains arise from derivative contracts that qualified for hedge accounting and were realized as a reduction of the cost of operations over the original delivery schedule of contracts. The gains would not have been realized in the year ended December 31, 2004 and the nine months ended September 30, 2005 since the purchased derivative contracts would have been fair valued as of January 1, 2004. | |
| (c) | The decrease in cost of sales and other operating expenses reflects the elimination of amortized past service costs and amortized net actuarial losses relating to post retirement benefits which were expensed in the year ended December 31, 2004 and the nine months ended September 30, 2005. | |
| (d) | Represents the amortization of the preliminary fair value increment allocated to operating capital assets. The pro forma amortization excludes the total amount of the purchase price allocation not subject to amortization of approximately $2.6 billion as it has been allocated to non-operating assets. On finalization of the purchase price allocation, if this amount is allocated to operating assets, pro forma amortization would change by approximately $113 million, before taxes, for the year ended December 31, 2004 and $84 million, before taxes, for the nine months ended September 30, 2005. Pro forma amortization and the above noted sensitivity have been based on a remaining weighted average estimated economic life of 23 years, and a reduction of one year in the weighted average estimated economic life would alter pro forma amortization by $28 million, before taxes, for the year ended December 31, 2004 and by $21 million for the nine months ended September 30, 2005. | |
| (e) | The increase in selling, general and administrative expenses reflects the expense relating to the expected exchange of stock options to be issued pursuant to the acquisition of Falconbridge. | |
| (f) | The increase in cost of sales and other operating expenses reflects the amortization of the allocation of the purchase price to equity accounted investments. | |
| (g) | The increase in interest expense reflects the issuance of CDN$2.87 billion of debt in connection with the acquisition of Falconbridge. | |
| (h) | The adjustment reflects the elimination of the Falconbridge minority interest in earnings assuming that Falconbridge and Noranda were amalgamated at the beginning of the period. | |
| (i) | The adjustment reflects the tax effect on the above adjustments. | |
| (j) | The adjustment reflects the reclassification of preferred share dividends to minority interest. |
F-6
| 4. | ITEMS NOT ADJUSTED |
| The pro forma consolidated financial information does not reflect (1) any special items such as payments pursuant to change of control provisions or integration costs which may be incurred as a result of the acquisition, and does not give effect to operating efficiencies, cost savings and synergies that are expected to result from the acquisition, or (2) the impact of undertakings that Inco is prepared, if required, to make in order to address regulatory clearance requirements, as there are no current agreements providing for implementation of such undertakings which, however, are expected to be carried out after the completion of the Offer. |
| 5. | PRO FORMA EARNINGS PER SHARE |
Earnings
per share computation for nine months ended September 30,
2005
|
Basic pro forma earnings per share computation
|
||||||
|
Numerator:
|
||||||
|
Pro forma net earnings
|
$ | 1,162 | ||||
|
Pro forma earnings available to common shareholders
|
$ | 1,162 | ||||
|
Denominator (thousands of shares):
|
||||||
|
Inco shares outstanding
|
188,892 | |||||
|
Common shares issued to Falconbridge shareholders
|
195,838 | |||||
|
Pro forma weighted-average common shares outstanding
|
384,730 | |||||
|
Basic pro forma earnings per common share
|
$ | 3.02 | ||||
|
Diluted pro forma earnings per share computation
|
||||||
|
Numerator:
|
||||||
|
Pro forma net earnings
|
$ | 1,162 | ||||
|
Dilutive effects of securities for Inco
|
||||||
|
Convertible debentures
|
11 | |||||
|
Pro forma net earnings applicable to common shares, assuming
dilution
|
$ | 1,173 | ||||
|
Denominator (thousands of shares):
|
||||||
|
Pro forma Inco shares outstanding
|
384,730 | |||||
|
Dilutive effect of securities for Inco
|
||||||
|
Convertible debentures
|
28,767 | |||||
|
Stock options
|
958 | |||||
|
Warrants
|
4,106 | |||||
|
Stock options issued on transaction
|
567 | |||||
|
Pro forma weighted-average common shares outstanding
|
419,128 | |||||
|
Diluted pro forma earnings per share
|
$ | 2.80 | ||||
F-7
Earnings
per share computation for the year ended December 31,
2004
|
Basic pro forma earnings per share computation
|
||||||
|
Numerator:
|
||||||
|
Pro forma net earnings
|
$ | 1,194 | ||||
|
Pro forma earnings applicable to common shares
|
$ | 1,194 | ||||
|
Denominator (thousands of shares):
|
||||||
|
Inco shares outstanding
|
187,550 | |||||
|
Common shares issued to Falconbridge shareholders
|
195,838 | |||||
|
Pro forma weighted-average common shares outstanding
|
383,388 | |||||
|
Basic pro forma earnings per common share
|
$ | 3.11 | ||||
|
Diluted pro forma earnings per share computation
|
||||||
|
Numerator:
|
||||||
|
Pro forma net earnings
|
$ | 1,194 | ||||
|
Dilutive effects of securities for Inco
|
||||||
|
Convertible debentures
|
6 | |||||
|
Pro forma net earnings applicable to common shares, assuming
dilution
|
$ | 1,200 | ||||
|
Denominator (thousands of shares):
|
||||||
|
Pro forma Inco shares outstanding
|
383,388 | |||||
|
Dilutive effect of securities for Inco
|
||||||
|
Convertible debentures
|
10,908 | |||||
|
Stock options
|
1,426 | |||||
|
Warrants
|
3,740 | |||||
|
Stock options issued on transaction
|
259 | |||||
|
Pro forma weighted-average common shares outstanding
|
399,721 | |||||
|
Diluted pro forma earnings per share
|
$ | 3.00 | ||||
F-8
The Depositary for the Offer is:
CIBC MELLON TRUST COMPANY
|
By Mail
P.O. Box 1036 Adelaide Street Postal Station Toronto, Ontario M5C 2K4 |
By Registered Mail, by Hand or by Courier 199 Bay Street Commerce Court West Securities Level Toronto, Ontario M5L 1G9 |
Telephone: (416) 643-5500
Toll Free: 1-800-387-0825
E-Mail: inquiries@cibcmellon.com
The Dealer Manager for the Offer is:
RBC CAPITAL MARKETS
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In Canada
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In the United States | |
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RBC Dominion Securities Inc.
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RBC Capital Markets Corporation | |
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200 Bay Street, 4th Floor Royal Bank Plaza, South Tower Toronto, Ontario M5J 2W7 Canada |
Two Embarcadero Center Suite 1200 San Francisco, California 94111 U.S.A. |
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Telephone: (416) 842-7519
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Toll Free: 1-888-720-1216 | |
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Toll Free: 1-888-720-1216
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The Information Agent for the Offer is:
105 Madison Avenue
New York, New York 10016
proxy@mackenziepartners.com
(212) 929-5500 (call collect)
or
Toll-Free: (800) 322-2885 (English)
(888)
405-1217 (French)
Any questions and requests for assistance may be directed by
holders of Falconbridge Shares to the Depositary, the Dealer
Manager or the Information Agent at their respective telephone
numbers and locations set out above. Shareholders may also
contact their broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Offer.
PART II
INFORMATION NOT REQUIRED TO BE SENT TO SHAREHOLDERS
The following are filed as exhibits to this Schedule:
| 1.1 | Certificate and Consent of Qualified Person for Robert A. Horn (Goro) (1) | |
| 1.2 | Certificate and Consent of Qualified Person for Dr. Wm. Gordon Bacon (Goro) (1) | |
| 1.3 | Certificate and Consent of Qualified Person for Dr. Wm. Gordon Bacon (Voisey’s Bay) (1) | |
| 1.4 | Certificate and Consent of Qualified Person for Lawrence B. Cochrane (Voisey’s Bay) (1) | |
| 2.1 | Annual report of the Bidder on Form 10-K for the year ended December 31, 2004 (Commission File No. 001-01143) filed March 15, 2005 | |
| 2.2 | Material change report of the Bidder filed October 12, 2005 concerning the entering into by the Bidder and Falconbridge Limited of the Support Agreement (1) | |
| 2.3 | Material change report of the Bidder filed August 9, 2005 concerning the appointment of a new Executive Vice-President and Chief Financial Officer of the Bidder effective November 1, 2005 (1) | |
| 2.4 | Material change report of the Bidder filed April 19, 2005 concerning the approval of the reinstatement of a quarterly cash dividend on the Bidder’s common shares and declaration of a quarterly dividend of $0.10 per share, payable June 1, 2005 to the Bidder’s shareholders of record as of May 16, 2005 (1) | |
| 2.5 | Unaudited consolidated financial statements of the Bidder, including the notes thereon, as at June 30, 2005, and for the three and six-month periods ended June 30, 2005 and 2004, incorporated by reference to Item 1 of Form 10-Q (Commission File No. 001-01143) filed August 3, 2005 | |
| 2.6 | Audited consolidated financial statements of the Bidder, including the notes thereon, and together with the auditor’s report, as at and for each of the financial years ended December 31, 2004, 2003 and 2002, incorporated by reference to Item 8 of Form 10-K (Commission File No. 001-01143) filed March 15, 2005 | |
| 2.7 | Management’s discussion and analysis of financial condition and results of operations of the Bidder for the year ended December 31, 2004, incorporated by reference to Item 7 of Form 10-K (Commission File No. 001-01143) filed March 15, 2005 | |
| 2.8 | Management’s discussion and analysis of financial condition and results of operations of the Bidder for the three and six-month periods ended June 30, 2005, incorporated by reference to Item 2 of Form 10-Q (Commission File No. 001-01143) filed August 3, 2005 | |
| 2.9 | Proxy circular and statement of the Bidder dated March 18, 2005 in connection with the annual and special meeting of shareholders held on April 20, 2005 (excluding the sections entitled “Report on Executive Compensation”, “Comparative Shareholder Return” and “Corporate Governance”), incorporated by reference to Exhibit 99 to Form 10-K (Commission File No. 001-01143) filed March 15, 2005 | |
| 2.10 | Unaudited consolidated financial statements of Falconbridge Limited, including notes thereto, as at June 30, 2005 and for the three and six-month periods ended June 30, 2005 and 2004, incorporated by reference to Exhibit 99.1 to Form 6-K (Commission File No. 001-11284) filed by Falconbridge Limited on August 9, 2005 | |
| 2.11 | Management’s discussion and analysis of financial condition and results of operations of Falconbridge Limited for the three and six-month periods June 30, 2005, incorporated by reference to Exhibit 99.2 to Form 6-K (Commission File No. 001-11284) filed by Falconbridge Limited on August 9, 2005 |
| 2.12 | Audited consolidated financial statements of Noranda Inc., including notes thereto, as at December 31, 2004 and 2003 and for each of the years then ended, together with the auditors’ report thereon, incorporated by reference to Exhibit 99.1 to Form 6-K (Commission File No. 001-11284) filed by Noranda Inc. on March 31, 2005 | |
| 2.13 | Management’s discussion and analysis of financial condition and results of operations of Noranda Inc. for the fiscal year ended December 31, 2004, incorporated by reference to Exhibit 99.1 to Form 6-K (Commission File No. 001-11284) filed by Noranda Inc. on March 31, 2005 | |
| 2.14 | Schedule I to the Notices of Special Meetings and Joint Management Information Circular of Noranda Inc. and Falconbridge Limited dated June 2, 2005, being the unaudited pro forma consolidated balance sheet of Falconbridge as at March 31, 2005, the pro forma consolidated statement of operations of Falconbridge for the three months ended March 31, 2005, the pro forma consolidated statement of operations of Falconbridge for the year ended December 31, 2004, and the notes thereon, incorporated by reference to Part I of Form F-80 (Commission File No. 333-125634) filed by Noranda Inc. and Falconbridge Limited on June 8, 2005 | |
| 2.15 | Unaudited consolidated financial statements of the Bidder, including the notes thereto, as at September 30, 2005 and December 31, 2004, and for the three and nine-month periods ended September 30, 2005 and 2004, incorporated by reference to Item 1 of Form 10-Q (Commission File No. 001-01143) filed October 31, 2005 | |
| 2.16 | Management’s discussion and analysis of financial condition and results of operations of the Bidder for the six-month period ended June 30, 2005, incorporated by reference to Item 2 of Form 10-Q (Commission File No. 001-01143) filed October 31, 2005 | |
| 2.17 | Unaudited consolidated financial statements of Falconbridge Limited, including notes thereto, as at September 30, 2005 and for the three and nine-month periods ended September 30, 2005 and 2004, incorporated by reference to Exhibit 99.1 to Form 6-K (Commission File No. 001-11284) filed by Falconbridge Limited on November 7, 2005 | |
| 2.18 | Management’s discussion and analysis of financial condition and results of operations of Falconbridge Limited for the three and nine-month periods ended September 30, 2005 and 2004, incorporated by reference to Exhibit 99.2 to Form 6-K (Commission File No. 001-11284) filed by Falconbridge Limited on November 7, 2005 |
| (1) | Previously filed with the Registrant’s Form F-8 (File No. 333-129218) filed October 24, 2005. |
PART III
UNDERTAKINGS AND CONSENT TO SERVICE OF PROCESS
| 1. | Undertakings |
| (a) | The Bidder undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to this Schedule or to transactions in said securities. | ||
| (b) | The Bidder undertakes to disclose in the United States, on the same basis as it is required to make such disclosure pursuant to applicable Canadian federal and/or provincial or territorial laws, regulations or policies, or otherwise discloses, information regarding purchases of the issuer’s securities in connection with the cash tender or exchange offer covered by this Schedule. Such information shall be set forth in amendments to this Schedule. | ||
| (c) | The Bidder undertakes to disclose in the United States, on the same basis as it is required to make such disclosure pursuant to any applicable Canadian federal and/or provincial or territorial law, regulation or policy, or otherwise discloses, information regarding purchases of the issuer’s or Bidder’s securities in connection with the offer. |
| 2. | Consent to Service of Process |
| (a) | On October 25, 2005 the Bidder filed with the Commission a written irrevocable consent and power of attorney on Form F-X. | ||
| (b) | Any change to the name or address of a registrant’s agent for service shall be communicated promptly to the Commission by amendment to Form F-X referencing the file number of the registrant. |
PART IV
SIGNATURES
By signing this Schedule, the Bidder consents without power of revocation that any
administrative subpoena may be served, or any administrative proceeding, civil suit or civil action
where the cause of action arises out of or relates to or concerns any offering made or purported to
be made in connection with the filing on this Amendment No. 1 to Schedule 14D-1F or any purchases
or sales of any security in connection therewith, may be commenced against it in any administrative
tribunal or in any appropriate court in any place subject to the jurisdiction of any state or of
the United States by service of said subpoena or process upon its designated agent.
| INCO LIMITED |
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| By: | /s/ Stuart F. Feiner | |||
| Stuart F. Feiner Executive Vice-President, General Counsel and Secretary |
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After due inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this statement is true, complete and correct.
| /s/ Stuart F. Feiner | ||||
| Stuart F. Feiner Executive Vice-President, General Counsel and Secretary December 15, 2005 |
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