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Gold/Mining/Energy : Winspear Resources -- Ignore unavailable to you. Want to Upgrade?

To: Paul Bilecki who wrote (26234)	7/17/2000 9:18:26 AM
From: kidl	Read Replies (1) \| Respond to of 26850

Winspear shareholders recommended to reject offer Winspear Diamonds Inc WSP Shares issued 51,634,088 Jul 14 close $4.51 Mon 17 Jul 2000 News Release Mr. Randy Turner reports The board of directors of Winspear Diamonds Inc. unanimously recommended that shareholders reject the offer by De Beers and not tender their common shares. “We are confident that our shareholders will conclude that the De Beers offer is unacceptable,” said Randy Turner, president and chief executive officer of Winspear Diamonds. “I want to assure shareholders that the board and management are absolutely focused on delivering superior value and we encourage them to reject the offer.” The board’s reasons for its rejection of the De Beers’ offer were outlined in its directors’ circular dated July 16, 2000: The offer substantially undervalues Winspear. The board believes that the Snap Lake diamond project is one of the most significant undeveloped diamond properties in the world. While the full extent of the kimberlite dike underlying the Snap Lake diamond project is not fully known at this time, current information, including the recently released July, 2000, scoping study and the prefeasibility study, indicates that the offer price significantly undervalues the asset and the company. “We are very close to being able to provide important new data as a result of our ongoing advanced exploration program, which is set to begin underground sampling in August,” added Mr. Turner. “When you consider that the decline will reach kimberlite in August and that the initial results of the bulk sampling program will be available in September, shareholders owe it to themselves to get as full and accurate a picture of the Snap Lake diamond project as possible.” “Moreover, the offer does not take into account the property’s full exploration potential,” Mr. Turner said. “Step-out drilling is under way at the Snap Lake diamond project and Snap Lake lies on only a small portion of the Camsell Lake property.” The De Beers’ offer price for Winspear is approximately $260-million. This is a substantial discount to the July, 2000, scoping study results, which estimated after-tax net present value (discounted at 5 per cent) of $1.35-billion for Winspear’s undisputed interest in the Snap Lake diamond project. Even the prefeasibility study, which was based only on drilling information available to June, 1999, estimates the company’s interest to be worth $500-million. The offer is financially inadequate. Winspear’s financial advisers, BMO Nesbitt Burns Inc. and Canaccord Capital Corporation, have advised the board that in their opinion the offer to shareholders is financially inadequate. The timing of the offer is opportunistic. The board of directors believes the offer was carefully timed to be made just as the ultimate value of the Snap Lake diamond project is becoming more fully understood. Furthermore, the board believes that the trading price of the common shares, immediately prior to the offer, was depressed primarily as a result of the weak state of equity markets across the mining sector and that the offer opportunistically capitalizes on this factor. While the offer price represents a premium to trading prices immediately before the announcement of the offer, it represents a discount of 9 per cent to the $4.65 at which common shares traded approximately one year earlier (July 6, 1999), and a discount of 20 per cent to the $5.30 high trading price in 1999. Consistent with mining equity markets in general, the trading price has weakened despite significant positive developments regarding the Snap Lake diamond project. The offer is coercive. The offer is open for the shortest time allowed by law. The board of directors believes that the short offer period is coercive in that it does not allow sufficient time to consider the offer and fully explore all alternatives to maximize shareholder value. “While De Beers has obviously spent a significant amount of time in planning its offer, Winspear has only 22 days to review and consider the value of the project and to review superior alternatives to maximize shareholder value,” said Mr. Turner. In addition, the offer is not a permitted bid under Winspear’s shareholder rights plan, which requires a takeover bid to remain open for a minimum of 60 days, thereby enabling the board to adequately consider all alternatives to maximize shareholder value. The offer also includes specific conditions that Winspear cancel its recently announced $20-million underwritten equity financing and that the company not issue securities. These conditions are coercive in that they are an attempt to restrict the board of directors’ ability to act in the best interests of the Winspear—particularly as it relates to further demonstrating the value of the Snap Lake diamond project to shareholders and third parties. Other offers or alternatives may emerge. Winspear has been approached by a number of companies interested in discussing a superior competing bid or alternative transaction to the offer. As a result, the company has entered into a number of confidentiality and standstill agreements and has opened a data room. Mr. Turner added: “While it is still relatively early in the process, we are encouraged by the high level of interest, and recommend that shareholders wait to see if other offers or alternatives develop. There is absolutely no disadvantage for Winspear shareholders in deferring a decision until just prior to the expiry of the bid.” The offer is highly conditional. The offer contains nine conditions, any of which, if not satisfied or waived, would allow De Beers to terminate the offer at its discretion, thereby essentially providing De Beers with an option on the common shares, at minimal financial risk to itself. The offer arbitrarily excludes U.S. shareholders. For some reason, it appears that De Beers has arbitrarily chosen to exclude U.S. shareholders from the offer. By failing to make the offer to all shareholders, the bid is not a permitted bid under the company’s shareholder rights plan. “In conclusion, we would just like to thank our valued shareholders for their continued support, and we will continue to keep them updated on our progress in a timely fashion,” said Mr. Turner. © Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com