UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT OF
FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES
EXCHANGE ACT OF 1934
For the
month of
January,
2010
Commission
File Number
001-04192
KHD Humboldt Wedag
International Ltd.
(Translation
of registrant’s name into English)
Suite
1620 – 400 Burrard Street, Vancouver, British Columbia, Canada V6C
3A6
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F. Form
20-F [X] Form 40-F [ ]
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1) [ ]
Note:
Regulation
S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if
submitted solely to provide an attached annual report to security
holders.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7) [ ]
Note:
Regulation
S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if
submitted to furnish a report or other document that the registrant foreign
private issuer must furnish and make public under the laws of the jurisdiction
in which the registrant is incorporated, domiciled or legally organized (the
registrant’s “home country”), or under the rules of the home country exchange on
which the registrant’s securities are traded, as long as the report or other
document is not a press release, is not required to be and has not been
distributed to the registrant’s security holders, and, if discussing a material
event, has already been the subject of a Form 6-K submission or other Commission
filing on EDGAR.
Indicate
by check mark whether by furnishing the information contained in this Form, the
registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of
1934. Yes
[ ] No [X]
If “Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule
12g3-2(b): 82 - [ ]
BRITISH
COLUMBIA
ALBERTA
QUEBEC
FORM
51-102F3
MATERIAL
CHANGE REPORT
Item
1. Name
and Address of Company
State
the full name of your company and the address of its principal office in
Canada:
KHD
Humboldt Wedag International Ltd. (the “Company”)
Suite
1620 – 400 Burrard Street
Vancouver,
British Columbia
V6C
3A6
Item
2. Date
of Material Change
January
6, 2010.
Item
3. News
Release
State
the date and method(s) of dissemination of the news release issued under section
7.1 of National Instrument 51-102.
News
Release, dated January 6, 2010, disseminated through PR Newswire.
Item
4. Summary
of Material Change
Provide
a brief but accurate summary of the nature and substance of the material
change.
The
Company announced today that it intends to restructure the Company into two
distinct legal entities: (1) a mineral royalty company and (2) an industrial
plant technology, equipment and service company (the
“Arrangement”). Subject to receipt of all necessary approvals, the
transactions will take place by way of a distribution to the Company’s
shareholders, on a pro rata basis, of all of the Company’s common shares of its
subsidiary, KHD Humboldt Wedag (Deutschland) AG (“KID”), which will own all of
the Company’s industrial plant technology, equipment and service
assets.
The
proposed Arrangement requires regulatory and court approval under the provisions
of the British Columbia
Business Corporations Act
, as
well as approval by the shareholders of the Company and other statutory
requirements customary for transactions of this type. The Company will apply to
the Supreme Court of British Columbia to obtain an interim order providing,
amongst other things, for the calling and holding of a special meeting of
shareholders of the Company to seek approval for the Arrangement. The
Company expects to hold this special meeting on March 22,
2010. Further information concerning the Arrangement will be
available in the Company’s management information circular to be filed with the
Securities and Exchange Commission at www.sec.gov and with Canadian securities
regulators on SEDAR at www.sedar.com.
Item
5.1 Full
Description of Material Change
Supplement
the summary required under item 4 with sufficient disclosure to enable a reader
to appreciate the significance and impact of the material change without refer
to other material. Management is in the best position to determine
what facts are significant and must disclose those facts in a meaningful
manner. See also item 7.
Some
examples of significant facts relating to the material change include: dates,
parties, terms and conditions, description of any assets, liabilities or capital
affected, purpose, financial or dollar values, reasons for the change, and a
general comment on the probable impact on the reporting issuer or its
subsidiaries. Specific financial forecasts would not normally be
required.
Other
additional disclosure may be appropriate depending on the particular
situation.
See
attached news release.
Item
5.2 Disclosure
for Restructuring Transactions
This
item applies to a material change report filed in respect of the closing of a
restructuring transaction under which securities are to be changed, exchanged,
issued or distributed. This item does not apply if, in respect of the
transaction, your company sent an information circular to its securityholders or
filed a prospectus or a securities exchange takeover bid circular.
Include
the disclosure for each entity that resulted from the restructuring transaction,
if your company has an interest in that entity, required by section 14.2 of Form
51-102F5. You may satisfy the requirement to include this disclosure by
incorporating the information by reference to another document.
Not
applicable.
Item
6. Reliance
on subsection 7.1(2) or (3) of National Instrument 51-102
If
this report is being filed on a confidential basis in reliance of subsection
7.1(2) or (3) of National Instrument 51-102, state the reasons for such
reliance.
Not
applicable.
Item
7. Omitted
Information
State
whether any information has been omitted on this basis that it is confidential
information.
In
a separate letter to the applicable regulator or securities regulatory authority
marked “Confidential” provide the reasons for your company’s omission of
confidential significant facts in the Report in sufficient detail to permit the
applicable regulator or securities regulatory authority to determine whether to
exercise its discretion to allow the omission of these significant
facts.
Not
applicable.
Item
8. Executive
Officer
Give
the name and business telephone number of an executive officer of your company
who is knowledgable about the material change and the Report, or the name of an
officer through whom such executive officer may be contacted.
Jouni
Salo
President
and Chief Executive Officer
604-683-8286
(contact through Rene Randall)
Item
9. Date
of Report
January
7, 2010
News Release
______________________________________________________________________________
KHD
HUMBOLDT WEDAG INTERNATIONAL LTD. TO INCREASE SHAREHOLDERS’ VALUE BY
DIVIDING THE COMPANY INTO TWO ENTITIES
–
A Mineral Royalty Company and an Industrial Plant Technology, Equipment and
Service Company –
NEW YORK
(January 6, 2010) . . . Based on a study undertaken to determine ways to best
enhance long term shareholder value, the Board of Directors of KHD Humboldt
Wedag International Ltd. (“KHD” or the “Company”) (NYSE: KHD) today announces
that it intends to restructure the KHD into two distinct legal entities: (1) a
mineral royalty company and (2) an industrial plant technology, equipment and
service company (the “Arrangement”). Subject to receipt of all necessary
approvals, the transactions will take place by way of a distribution to KHD’s
shareholders, on a pro rata basis, of all of KHD’s common shares of its
subsidiary, KHD Humboldt Wedag (Deutschland) AG (“
KID
”), which will own all of
KHD’s industrial plant technology, equipment and service assets.
Under the
proposed structure, the new mineral royalty company, which would change its name
from KHD to Terra Nova Royalty Corporation (“
Terra Nova
”), would continue
to receive royalty payments from the Wabush Iron Ore Mine (the “Wabush”) in the
province of Newfoundland and Labrador, Canada under a master lease that
terminates in the year 2055. Wabush has been a producing mine since 1956, and
currently has proven reserves of 75 million tons representing approximately
15-year production based on historical production.
Management
intends to institute a dividend policy for Terra Nova shareholders. Terra Nova
intends to focus on:
|
•
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acquiring
additional existing mineral royalties;
|
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•
|
providing
capital for the exploration, development and construction of iron ore and
other
|
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•
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metals
mines in exchange for royalties;
|
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•
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monetizing
metal by-product streams from either operating mines or projects under
development; and
|
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•
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providing
acquisition financing to established operating companies in return for a
royalty on acquired properties.
|
-
MORE –
_____________________________________________________________________
|
Contact
Information:
|
Allen
& Caron Inc.
|
Rene
Randall
|
|
|
Joseph
Allen (investors)
|
KHD
Humboldt Wedag International Ltd.
|
|
|
1
(212) 691-8087
|
1
(604) 683-8286 ex 224
|
|
|
joe@allencaron.com
|
randall.r@khd.de
|
|
|
or
|
|
|
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Brian
Kennedy (media)
|
|
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1
(212) 691-8087
|
|
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brian@allencaron.com
|
|
Subject
to obtaining all necessary approvals, Terra Nova intends to maintain its listing
on the New York Stock Exchange (the “NYSE”) and will continue to trade the
“regular way”.
Concurrently
all of KHD’s industrial plant technology, equipment and service operations, KID,
will be listed on the regulated market of the Frankfurt Stock Exchange (the
“FSE”). Management will focus on enhancing the traditional cement business
through an expansion of current activities in the rapidly growing Indian market.
This company will further strengthen its operational and management base in New
Delhi, India, as well as add additional resources in other fast-growing emerging
markets such as Russia. The company’s main engineering centre of excellence in
Cologne, Germany will have a primary focus on developing further the company’s
leading process know-how and product engineering capabilities.
KID will
also forge strategic alliances with complementary international partners to
offer innovative solutions, including engineering procurement construction
solutions, and develop new, environmentally friendly technologies for our
customer base.
A
subsequent European public offering of KID shares is planed to be completed for
an additional ten percent of its capital in order to create greater liquidity in
the European market, and the KID shares will begin trading on the FSE on a
“when-issued” basis. The FSE listing of KID is expected to be completed in
March, 2010.
The two
companies resulting from the Arrangement will have the following attributes that
will contribute to maximizing market value and creating additional long-term
value for KHD shareholders. All dollar figures are in U.S. dollars on a pro form
basis:
(1)
Terra Nova
(Mineral Royalty
Business)
|
•
|
Base
for growth through acquisitions of other royalty
streams.
|
|
•
|
Experienced
management.
|
|
•
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Debt
free.
|
|
•
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Cash
of US$113 million.
|
|
•
|
Existing
royalty stream now enhanced with a single owner, stated capital
expenditures, expanded workforce, increased production and a new and
enhanced reserve calculation.
|
|
•
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Updated
reserves of 75 million tons of iron ore with an estimated mine life of at
least 15 years based on historical production.
|
|
•
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Dividend
policy.
|
(2)
KID
(Industrial Plant
Technology, Equipment and Service Business)
|
•
|
Experienced
management team which has completed an internal restructuring after the
recent financial crisis.
|
|
•
|
Enhanced
customer care by adding new customer service centers and resources in the
growing emerging markets.
|
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•
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Primary
focus on the fast developing Indian market.
|
|
•
|
Additional
management and operational resources in New Delhi,
India.
|
|
•
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The
centre of excellence for process and product engineering in Cologne,
Germany will be strengthened in order to add growth in quality
engineering.
|
|
•
|
Expanded
business model for service and spare parts to capitalize on KHD’s
installed base of over 490 cement plants worldwide and to complement
existing operations.
|
KHD HUMBOLDT WEDAG INTERNATIONAL LTD. TO INCREASE SHAREHOLDERS’
EQUITY BY DIVIDING THE COMPANY PAGE 2/5
|
•
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Strategic
alliances with international partners to develop and market new
technologies with a strong environmental focus.
|
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•
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Strategic
alliances with international partners to offer EPC solutions to our
customers.
|
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•
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Technology
driven, primarily in the environmental, pyro-processing and grinding
areas.
|
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•
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Adequate
bonding lines.
|
The
Company commented, “We have studied various ways to increase value for KHD’s
shareholders and we believe that through this transaction, the sum of the parts
has greater value than the whole. What precipitated us to take this action now
were the significant changes at Wabush. Cliffs Natural Resources Inc. recently
announced that it would acquire a 100 percent stake in the mine from its two
partners, and also updated existing reserves to 75 million tons of iron ore
which implies an estimated mine life of at least 15 years based on historical
production. This changed the way we looked at the new now more clearly defined
segments of KHD.” Canadian and United States shareholders of KHD are urged to
consult their tax advisors with respect to federal, local and foreign tax
consequences.
KHD
intends to hold investor information meetings during the third week of February
2010.
The
proposed Arrangement requires court approval under the provisions of the British
Columbia
Business Corporations
Act
, as well as approval by the shareholders of KHD and other statutory
requirements customary for transactions of this type. KHD will apply to the
Supreme Court of British Columbia to obtain an interim order providing, amongst
other things, for the calling and holding of a special meeting of shareholders
of KHD to seek approval for the Arrangement. KHD expects to hold this special
meeting on March 22, 2010. Further information concerning the Arrangement will
be available in the KHD management information circular to be filed with the
Securities and Exchange Commission at www.sec.gov and with Canadian securities
regulators on SEDAR at www.sedar.com.
About
KHD Humboldt Wedag International Ltd.
KHD
Humboldt Wedag International Ltd. owns companies that operate internationally in
the industrial plant technology, equipment and service industry, and specializes
in the cement industry. To obtain further information about KHD, please visit
our website at http://www.khdhumboldt.com
Disclaimer
for Forward-Looking Information
Certain
statements in this release are forward-looking statements, which reflect the
expectations of management regarding KHD’s planned restructuring.
Forward-looking statements consist of statements that are not purely historical,
including any statements regarding beliefs, plans, expectations or intentions
regarding the future. No assurance can be given that any of the events
anticipated by the forward-looking statements will occur or, if they do occur,
what benefits the Company will obtain from them. These forward-looking
statements reflect management’s current views and are based on certain
assumptions. These assumptions, which include management’s current expectations,
estimates and assumptions about the potential benefits of the Arrangement, the
areas that the resulting legal entities will focus on, the common shares of KID
to be distributed to the shareholders of KHD, and that the restructuring will
increase value for KHD shareholders, may prove to be incorrect. A number of
risks and uncertainties could cause our actual results to differ materially from
those expressed or implied by the forward-looking statements, including: (1) the
failure to obtain any necessary approvals for the restructuring, (2) the timing
and extent of the restructuring, (3) potential negative financial impact
from
KHD HUMBOLDT WEDAG INTERNATIONAL LTD. TO INCREASE SHAREHOLDERS’
EQUITY BY DIVIDING THE COMPANY PAGE 3/5
regulatory
investigations, claims, lawsuits and other legal proceedings and challenges
related to the restructuring, (4) a decrease in Wabush’s estimated reserves or
mine life or in the Wabush royalty, (5) the uncertainty of government regulation
and politics in India and other markets, (6) the inability to successfully
expand in the Indian market, (7) continuing decreased demand for our products,
including the renegotiation, delay and/or cancellation of projects by our
customers and the reduction in the number of project opportunities, (8) a
decrease in the demand for cement, minerals and related products, (9) the number
of competitors with competitively priced products and services, (10) product
development or other initiatives by our competitors, (11) shifts in industry
capacity, (12) fluctuations in foreign exchange and interest rates, (13)
fluctuations in availability and cost of raw materials or energy, (14) delays in
the start of projects, (15) delays in the implementation of projects and
disputes regarding the performance of our services, and (16) other factors
beyond our control. Additional information about these and other assumptions,
risks and uncertainties are set out in the “Risk Factors” section in our Form
6-K filed with the Securities and Exchange Commission and the “Risks and
Uncertainties” section in our MD&A filed with Canadian securities
regulators.
-
UNAUDITED PRO FORMA FINANCIAL TABLE FOLLOWS -
KHD HUMBOLDT WEDAG INTERNATIONAL LTD. TO INCREASE SHAREHOLDERS’
EQUITY BY DIVIDING THE COMPANY PAGE 4/5
KHD
HUMBOLDT WEDAG INTERNATIONAL LTD.
PRO
FORMA CONSOLIDATED BALANCE SHEETS
As
of September 30, 2009
(U.S.
Dollars in Thousands)
(Unaudited)
|
|
|
Royalty
Group
|
|
Industrial
Group
|
|
|
|
|
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ASSETS
|
|
|
|
|
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|
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|
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Current
Assets
|
|
|
|
|
|
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Cash
and cash equivalents
|
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$
|
112,540
|
|
$
|
294,883
|
|
|
Other
receivables
|
|
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7,799
|
|
|
292,698
|
|
|
Total
current assets
|
|
|
120,339
|
|
|
587,581
|
|
|
|
|
|
|
|
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Non-current
Assets
|
|
|
221,842
|
|
|
7,426
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
342,181
|
|
$
|
595,007
|
|
|
|
|
|
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|
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LIABILITIES
& SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
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Current
liabilities
|
|
$
|
5,320
|
|
$
|
390,270
|
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
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50,176
|
|
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83,444
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
55,496
|
|
|
473,714
|
|
|
|
|
|
|
|
|
Shareholders’
Equity
|
|
|
286,685
|
|
|
121,293
|
|
|
|
|
|
|
|
|
|
|
|
$
|
342,181
|
|
$
|
595,007
|
|
|
|
|
|
|
|
|
OTHER
FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital
|
|
$
|
115,019
|
|
$
|
197,311
|
|
|
|
|
|
|
|
|
Book
value per share
|
|
$
|
9.43
|
|
$
|
3.99
|
|
|
|
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Note:
This pro forma balance sheet is prepared giving effect to the restructuring of
the Company into a mineral royalty company (royalty group) and an industrial
plant technology, equipment and service company (industrial group). The pro
forma balance sheet for the mineral royalty company reflects an upward
revaluation of the royalty assets and the mineral royalty company expects to
recognize the revaluation adjustment in its financial statements when the
mineral royalty company adopts International Financial Reporting Standards on or
before January 1, 2011, though it is not recognized in the Canadian accounting.
The royalty assets were revalued because the operator recently updated existing
reserves to 75 million tons of iron ore which implies an estimated mine life of
at least 15 years based on historical production. As at September 30, 2009, the
Company’s royalty assets were presented on its historical balance sheet at $27
million. This is reconciled to the pro forma value of $200 million by valuing
the royalty interest using a discount cash flow model with forecast revenues to
2023 at a discount rate of 8% p.a., resulting in an upward revaluation of $173
million.
KHD HUMBOLDT WEDAG INTERNATIONAL LTD. TO INCREASE SHAREHOLDERS’
EQUITY BY DIVIDING THE COMPANY PAGE 5/5
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
KHD
HUMBOLDT WEDAG INTERNATIONAL LTD.
By
/s/ Jouni
Salo
Jouni
Salo, President and Chief Executive Officer
Date:
January 29, 2010
By
/s/ Alan
Hartslief
Alan
Hartslief, Chief Financial Officer
Date:
January 29, 2010