Increases Cash by C$1.00 Per Share PHOENIX and TORONTO, July 16
/PRNewswire-FirstCall/ -- Phelps Dodge Corp. (NYSE:PD), Inco Ltd.
(TSX, NYSE: N) and Falconbridge Ltd. (TSX, NYSE: FAL) announced
today that all three companies have taken action to improve the
terms of their three-way combination. Phelps Dodge has increased
the cash portion of the consideration to be paid to the
shareholders of Inco in the combination of Phelps Dodge and Inco by
C$2.75 per Inco share. Inco has increased the cash portion of its
offer to purchase all outstanding common shares of Falconbridge by
C$1.00 per Falconbridge share, and the Falconbridge board of
directors has declared a special cash dividend of C$0.75 per
Falconbridge common share. Improved Terms Under the improved terms,
Phelps Dodge will acquire all outstanding common shares of Inco for
a combination of cash and common shares of Phelps Dodge having a
value of C$80.70 per Inco share, based upon the closing price of
Phelps Dodge stock and the closing U.S./Canadian dollar exchange
rate on Friday, July 14, 2006. Shareholders of Inco will receive
0.672 shares of Phelps Dodge stock plus C$20.25 per share in cash
for each share of Inco stock. This represents a premium of 7.8
percent to Inco's market price as of close of trading on July 14
and a premium of 23.7 percent to Inco's market price as of the
close of trading on June 23, the last trading day before the
announcement of the combination of Phelps Dodge, Inco and
Falconbridge. Under its enhanced bid for Falconbridge, Inco is now
offering C$18.50 plus 0.55676 shares of Inco for each share of
Falconbridge, assuming full proration of the consideration. With
the completion of both transactions, Falconbridge shareholders
would receive an implied total consideration on a "look-through"
basis of C$63.43 per Falconbridge common share, consisting of: (a)
C$29.77 in cash; and (b) 0.3741 of a Phelps Dodge Inco Corp. common
share (based on the closing price of the Phelps Dodge common shares
on the New York Stock Exchange and applicable U.S. Federal Reserve
U.S.-Canadian dollar exchange rates on July 14, 2006). Falconbridge
Special Dividend In order to further increase the value received by
Falconbridge shareholders, the board of Falconbridge declared a
special cash dividend of C$0.75 per Falconbridge share payable on
Aug. 10, 2006, to common shareholders of record at the close of
business on July 26, 2006. The Falconbridge board also has
unanimously determined that Inco's amended offer for the shares of
Falconbridge is superior to the unsolicited offer by Xstrata and
unanimously recommends that Falconbridge shareholders accept the
Inco offer. Reduction in Minimum Tender Condition In addition, Inco
has reduced the minimum condition in its offer for Falconbridge
from two thirds of the outstanding shares of Falconbridge to 50.01
percent of such outstanding shares on a fully diluted basis. Phelps
Dodge and Inco also amended their Combination Agreement so that the
combination of Phelps Dodge and Inco may be consummated before the
acquisition by Inco of 100 percent of Falconbridge. Inco's amended
offer for Falconbridge will expire on July 27, 2006. The three-way
combination of Phelps Dodge, Inco and Falconbridge will create one
of the world's leading mining companies and the largest based in
North America. Phelps Dodge Inco will be the world's leading nickel
producer, the largest publicly traded copper producer and a leading
producer of molybdenum and cobalt. As part of the transaction,
Phelps Dodge expects to repurchase up to US$5.0 billion of its
shares in the 12 months after closing. J. Steven Whisler, chairman
and chief executive officer of Phelps Dodge, said: "We strongly
believe the combination of Phelps Dodge, Inco and Falconbridge
represents a unique value-creation opportunity for the shareholders
of all three companies. There's no question that the value of the
enhanced Inco offer for Falconbridge is superior to the unsolicited
offer by Xstrata. In addition to the value inherent in the offer,
the Falconbridge shareholders will have the ability to participate
in the upside resulting from the three-way combination through
their ownership of almost 30 percent of the combined company, which
includes a 30 percent share in the $900 million of expected annual
synergies, which in total have a net present value of approximately
$5.8 billion." Scott Hand, chairman and chief executive officer of
Inco, said: "Today's actions demonstrate our shared commitment to
create the leading North American-based mining company and a global
powerhouse in copper and nickel. That's great news for our
shareholders, for our employees, for our communities and for
Canada." Derek Pannell, chief executive officer of Falconbridge,
said: "We are pleased with the actions taken today by Phelps Dodge
and Inco and by their affirmation of the value of Falconbridge. The
special dividend declared by our board today further enhances the
expected return to our shareholders. We are confident our
shareholders will see the value in the combination of these three
companies to create Phelps Dodge Inco." All required regulatory
approvals for Inco's acquisition of Falconbridge have been
received. Phelps Dodge's offer to acquire Inco is expected to close
in September, subject to Phelps Dodge and Inco shareholder
approval, regulatory approvals and customary closing conditions.
Phelps Dodge is one of the world's leading producers of copper and
molybdenum and is the largest producer of molybdenum-based
chemicals and continuous-cast copper rod. The company employs
13,500 people worldwide. Inco is a primary metals company and the
world's second largest producer of nickel. It employs 12,000 people
around the world at mining operations, production facilities, a
research center and through its marketing and sales network.
Falconbridge is a leading copper and nickel company with
investments in fully integrated zinc and aluminum assets. Its
primary focus is the identification and development of world-class
copper and nickel ore bodies. It employs 14,500 people at its
operations and offices in 18 countries. Webcast Management of
Phelps Dodge, Inco and Falconbridge will host a webcast for
investors at 9:00 a.m. eastern time July 17, to discuss the details
of the transaction. The webcast can be accessed at
http://www.phelpsdodgeinco.com/. Forward-Looking Statements These
materials include "forward-looking statements" (as defined in
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934) including statements regarding,
among other things, the benefits of the combination with Inco and
the combined company's plans, objectives, expectations and
intentions. All statements other than historical information are
forward-looking statements. These forward-looking statements are
based on management's current beliefs and expectations, speak only
as of the date made, and are subject to a number of significant
risks and uncertainties that cannot be predicted or quantified and
are beyond our control. Future developments and actual results
could differ materially from those set forth in, contemplated by,
or underlying the forward-looking statements. The following
factors, among others, could cause actual results to differ from
those described in the forward-looking statements in this
documents: (i) the ability to obtain governmental approvals of the
combination on the proposed terms and schedule; (ii) the failure of
Inco's shareholders to approve the plan of arrangement; (iii) the
failure of Phelps Dodge's shareholders to authorize the issuance of
Phelps Dodge common shares, the change of Phelps Dodge's name to
Phelps Dodge Inco and an increase in the size of Phelps Dodge's
board of directors as required under the combination agreement;
(iv) the risks that the businesses of Phelps Dodge and Inco and/or
Falconbridge will not be integrated successfully; (v) the risks
that the cost savings, growth prospects and any other synergies
from the combination may not be fully realized or may take longer
to realize than expected; (vi) the combined company's inability to
refinance indebtedness incurred in connection with the combination
on favorable terms or at all; (vii) the possibility that Phelps
Dodge will combine with Inco only; (viii) the possible impairment
of goodwill and other long-lived assets resulting from the
combination and the resulting impact on the combined company's
assets and earnings; and (ix) additional factors that may affect
future results of the combined company set forth in Phelps Dodge's,
Inco's and Falconbridge's filings with the Securities and Exchange
Commission, which filings are available at the SEC's Web Site at
(http://www.sec.gov/). Except as required by law, we are under no
obligation, and expressly disclaim any obligation, to update, alter
or otherwise revise any forward-looking statement, whether written
or oral, that may be made from time to time, whether as a result of
new information, future events or otherwise. Note: In connection
with the proposed combination, Phelps Dodge Corporation ("Phelps
Dodge") has filed a preliminary proxy statement on Schedule 14A
with the SEC. Investors are urged to read the definitive proxy
statement (including all amendments and supplements to it) because
it contains important information. Investors may obtain free copies
of the definitive proxy statement when it is filed, as well as
other filings containing information about Phelps Dodge, Inco and
Falconbridge, without charge, at the SEC's Web site
(http://www.sec.gov/). Copies of Phelps Dodge's filings may also be
obtained without charge from Phelps Dodge at Phelps Dodge's Web
site (http://www.phelpsdodge.com/) or by directing a request to
Phelps Dodge, One North Central Avenue, Phoenix, Arizona
85004-4415, Attention: Assistant General Counsel and Corporate
Secretary (602) 366-8100. Important Legal Information This
communication may be deemed to be solicitation material in respect
of Inco's proposed combination with Falconbridge. Inco filed with
the U.S. Securities and Exchange Commission (the "SEC"), on October
24, 2005, and July 14, 2006, registration statements on Form F-8,
which include Inco's offer and take-over bid circular, and has
filed amendments thereto, which include notices of extension and
variation, and will file further amendments thereto as required, in
connection with the proposed combination with Falconbridge. The
offer and take-over bid circular and the notices of variation and
extension have been sent to shareholders of Falconbridge Limited.
Inco has also filed, and will file (if required), other documents
with the SEC in connection with the proposed combination.
Falconbridge has filed a Schedule 14D-9F in connection with Inco's
offer and has filed, and will file (if required), amendments
thereto and other documents regarding the proposed combination, in
each case with the SEC. Investors and security holders are urged to
read the registration statements and any other relevant documents
filed or that will be filed with the SEC when they become available
because they will contain important information. Investors and
security holders are urged to read Inco's
solicitation/recommendation statement on schedule 14D-9 that Inco
filed with the SEC on May 31, 2006, and any amendments Inco may
file thereto, as it contains, and such amendments, if any, will
contain, important information regarding Teck Cominco's proposed
combination with Inco. This communication is not a solicitation of
a proxy from any security holder of Inco or Phelps Dodge in respect
of Inco's proposed combination with Phelps Dodge. Inco intends to
file a Management Information Circular regarding the proposed
combination with the securities commissions or equivalent
regulatory authorities in Canada and to provide the Management
Information Circular to Inco shareholders and Phelps Dodge has
filed a preliminary Proxy Statement on Schedule 14A regarding the
proposed combination with the SEC. We urge investors to carefully
read the management information circular, and any amendments Inco
may file thereto, when it becomes available because it, and any
such amendments, if any, will contain important information about
Inco, Phelps Dodge and the proposed combination. We urge investors
to carefully read the Proxy Statement, and any amendments Phelps
Dodge may file thereto, because it and such amendments, if any,
will contain important information about Inco, Phelps Dodge and
Inco's proposed combination with Phelps Dodge. Inco, Phelps Dodge
and their executive officers and directors may be deemed to be
participants in the solicitation of proxies from Inco and Phelps
Dodge security holders in favor of Inco's proposed combination with
Phelps Dodge. Information regarding the security ownership and
other interests of Inco's and Phelps Dodge's executive officers and
directors will be included in the Management Information Circular
and Proxy Statement, respectively. Investors and security holders
may obtain copies of the offer and take-over bid circular, the
notices of variation and extension, the registration statement, the
Solicitation/Recommendation Statement and Inco's, Falconbridge's
and Phelps Dodge's other public filings made from time to time by
Inco, Falconbridge and Phelps Dodge with the Canadian Securities
Regulators, at http://www.sedar.com/, and with the SEC at the SEC's
web site, http://www.sec.gov/, free of charge. The proxy statement
may also be obtained free of charge at http://www.sec.gov/ and the
Management Information Circular (when it becomes available) may
also be obtained free of charge at http://www.sedar.com/. In
addition, the offer and take-over circular and the other disclosure
documents may be obtained free of charge by contacting Inco's media
or investor relations departments and copies of Phelps Dodge's
filings may be obtained without charge from Phelps Dodge at Phelps
Dodge's Web site (http://www.phelpsdodge.com/) or by directing a
request to Phelps Dodge, One North Central Avenue, Phoenix, Arizona
85004-4415, Attention: Assistant General Counsel and Corporate
Secretary (602) 366-8100. Phelps Dodge Media: Peter J. Faur (602)
366-7993 Investors: Stanton K. Rideout (602) 366-8589 Inco Ltd.
Media: Steve Mitchell (416) 361-7950 Investors: Sandra Scott (416)
361-7758 Falconbridge Media & Investors: Denis Couture (416)
982-7020 DATASOURCE: Phelps Dodge Corp. CONTACT: Media: Peter J.
Faur, +1-602-366-7993, or Investors: Stanton K. Rideout,
+1-602-366-8589, both for Phelps Dodge; or Media: Steve Mitchell,
+1-416-361-7950, or Investors: Sandra Scott, +1-416-361-7758, both
for Inco Ltd.; or Media & Investors: Denis Couture,
+1-416-982-7020 for Falconbridge Web site:
http://www.phelpsdodge.com/ http://www.phelpsdodgeinco.com/
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