Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS)
("Pan American" or the "Company") and Tahoe Resources Inc.
(NYSE:TAHO) (TSX:THO) ("Tahoe") today announced that they have
entered into a definitive agreement for Pan American to acquire all
of the outstanding shares of Tahoe pursuant to a plan of
arrangement (the "Transaction"), creating the world's premier
silver mining company. Shareholders of Tahoe will be entitled to
elect to receive common shares of Pan American and/or cash in
exchange for their shares of Tahoe. Additional consideration will
be in the form of the right to a contingent payment in common
shares of Pan American tied to the restart of the Escobal mine in
Guatemala.
Highlights of the combined entity:
- World-class primary silver asset
portfolio, diversified across the Americas.
- World's largest silver reserve base and
silver measured and indicated resource base.
- Largest publicly-traded silver mining
company by free float.
- Superior operating metrics with
industry-leading production, growth and margins.
- Robust growth profile with the restart
of the Escobal silver mine following completion of the consultation
process and community engagement. Escobal is a well built, turn-key
operation with minimal capital outlay and development risk. The
mine produced 21Moz of Ag at US$8.63/oz Ag AISC during its last
four quarters of undisturbed production.
- Additional upside through expansion of
the La Colorada mine following the recent exploration discovery and
potential development of Navidad, one of the world's largest
undeveloped primary silver deposits.
- Gold assets well positioned to deliver
low-cost production following recent capital investments.
- Management team with a 25-year proven
track record of responsibly building and operating mines in Latin
America.
- Strong financial position and access to
capital, enabling the Company to advance key growth projects.
- Potential non-core asset sales and
operating synergies to provide further strengthening of the balance
sheet.
Transaction Terms
Pursuant to the Arrangement, Tahoe shareholders may elect to
receive US$3.40 in cash or 0.2403 Pan American shares for each
Tahoe share, subject in each case to pro-ration based on a maximum
cash consideration of US$275 million and a maximum number of Pan
American shares issued of 56.0 million, totaling US$1,067 million
(the "Base Purchase Price"). The Base Purchase Price represents a
premium of 34.9% to Tahoe’s volume weighted average price (“VWAP”)
for the 20-day period ending on November 13, 2018.
In addition, Tahoe shareholders will receive contingent
consideration in the form of contingent value rights (“CVRs”), that
will be exchanged for 0.0497 Pan American shares for each Tahoe
share, currently valued at US$221 million, and payable upon first
commercial shipment of concentrate following restart of operations
at the Escobal mine (the “Contingent Purchase Price”). The CVRs
will be transferable and have a term of 10 years. The total
consideration, including the Base Purchase Price and the Contingent
Purchase Price, is US$4.10 per share representing a premium of
62.8% to Tahoe’s VWAP for the 20-day period ending on November 13,
2018.
At closing, existing Pan American and Tahoe shareholders will
own approximately 73% and 27% of Pan American, respectively. Upon
satisfaction of the payment conditions under the terms of the CVR,
Pan American and Tahoe shareholders will own approximately 68% and
32%, respectively, of the combined company (based upon the number
of Pan American shares outstanding following completion of the
Transaction).
Each of Tahoe’s directors and senior officers, who together hold
or exercise control or direction over approximately 5.3 million
common shares of Tahoe, representing approximately 1.7% of Tahoe’s
issued and outstanding common shares, have entered into support
agreements with Pan American, agreeing to vote their Tahoe shares
in favour of the Transaction.
Pan American has sufficient cash on hand and available under
existing credit arrangements to finance the cash portion of the
consideration for the Transaction.
Commenting on the transaction, Michael Steinmann, President and
Chief Executive Officer of Pan American Silver, said: “The
combination of Pan American and Tahoe will establish the world’s
premier silver mining company with an industry-leading portfolio of
assets, superior growth opportunities and attractive operating
margins. This transaction doubles our silver reserves and further
improves our cost profile. We will build on that strong foundation,
optimizing these high-quality assets to deliver profitable growth
and superior returns."
Added Mr. Steinmann: "We are proud of our 25-year track record
of operating mines in Latin America in an ethical, collaborative
and sustainable way. Our reputation as a responsible operator
reflects our ability to build successful partnerships with the
communities around our operations, respecting the diversity of
local populations and safeguarding the natural environment. We are
looking forward to applying this experience at Escobal, and working
with the local communities towards concluding the consultation
process and gaining their support to enable the restart of the
mine."
Kevin McArthur, Executive Chair of Tahoe Resources, said: "This
transaction allows our shareholders to participate in the creation
of the world's premier silver company with the contribution of the
world-class Escobal mine to Pan American's existing asset base. In
addition to the upfront premium, we will continue to participate in
the upside inherent in a restart of Escobal through the CVRs. Pan
American’s excellent track record of developing mines and fostering
strong, mutually beneficial relationships with local stakeholders
gives us confidence that the combined company will be best
positioned to maximize value for shareholders."
Board of Directors’ Recommendations
The Board of Directors of Pan American has unanimously approved
the Transaction. The Board of Directors of Tahoe, on the unanimous
recommendation of a Committee of Independent Directors of Tahoe,
has unanimously approved the Transaction. The Board of Directors of
each of Pan American and Tahoe unanimously recommend that Pan
American and Tahoe shareholders vote in favor of the
Transaction.
BMO Capital Markets and Trinity Advisors Corporation have each
provided a fairness opinion to the Independent Committee of the
Board of Directors of Tahoe. CIBC World Markets Inc. and TD
Securities have each provided a fairness opinion to Pan American’s
Board of Directors.
Each of the directors and senior officers of Pan American,
holding approximately 3.3 million of Pan American’s common shares,
representing approximately 2.2% of Pan American's issued and
outstanding common shares have entered into agreements to support
the Transaction.
Transaction Conditions and Timing
The Transaction will be implemented by way of a court-approved
plan of arrangement under the Business Corporations Act (British
Columbia) and will require the approval of: (i) 66 2/3% of the
votes cast by the holders of Tahoe’s common shares present in
person or represented by proxy, and (ii) if applicable, a simple
majority of the votes cast by the holders of Tahoe’s common shares
after excluding any votes of “related parties” and “interested
parties’ and other persons required to be excluded under Canadian
Multilateral Instrument 61-101 Protection of Minority Security
Holders in Special Transactions, all at a special meeting to
consider the Transaction.
The completion of the Transaction will also require approval of
a simple majority of Pan American shareholders in respect of the
share issuance in connection with the Transaction and approval from
66 2/3% of Pan American's shareholders to an increase in Pan
American's authorized share capital.
The completion of the Transaction will also be subject to
regulatory approvals and closing conditions customary in
transactions of this nature. The Arrangement Agreement provides for
customary deal-protection provisions, including mutual
non-solicitation covenants and rights to match superior proposals.
The Arrangement Agreement includes a reciprocal termination fee of
US$38 million, payable by Tahoe to Pan American, or Pan American to
Tahoe, as the case may be, under certain circumstances.
It is anticipated that the special shareholder meetings of Tahoe
and Pan American shareholders to consider the Transaction will be
held in January 2019. The Transaction is expected to close in the
first quarter of 2019.
None of the securities to be issued pursuant to the Arrangement
Agreement have been or will be registered under the United States
Securities Act of 1933, as amended (the “U.S. Securities Act”), or
any state securities laws, and any securities issued in the
Arrangement are anticipated to be issued in reliance upon available
exemptions from such registration requirements pursuant to Section
3(a)(10) of the U.S. Securities Act and applicable exemptions under
state securities laws. This press release does not constitute an
offer to sell or the solicitation of an offer to buy any
securities.
Advisors and Counsel
CIBC World Markets Inc. is acting as lead financial advisor to
Pan American in connection with the Transaction and TD Securities
has provided a fairness opinion to Pan American's Board of
Directors. Borden Ladner Gervais LLP is serving as Canadian counsel
and Skadden, Arps, Slate, Meagher & Flom LLP is acting as U.S.
counsel to Pan American.
Trinity Advisors Corporation is acting as financial advisor to
Tahoe in connection with the Transaction and BMO Capital Markets
has provided a fairness opinion to Tahoe's Board of Directors.
Cassels Brock & Blackwell LLP is serving as Canadian counsel to
the Committee of Independent Directors of Tahoe and Neal Gerber
Eisenberg LLP is acting as U.S. counsel to Committee of the
Independent Directors of Tahoe.
A conference call to discuss the transaction is scheduled for
November 14, 2018
Date: November 14, 2018 Time: 8:30 am ET (5:30
am PT) Dial-in numbers: 1-855-327-6838 (toll-free in Canada and the
U.S.) +1-604-235-2082 (international participants) Webcast:
www.panamericansilver.com
Media is welcome to participate in listen-only mode.
Callers should dial in 5 to 10 minutes prior to the scheduled
start time. The live webcast and presentation slides will be
available on the Company's website
at www.panamericansilver.com. An archive of the webcast will
also be available for three months.
Transaction Documents
Documents related to the Transaction will be available on Pan
American Silver's website at www.panamericansilver.com. The Company
has posted a new corporate video "Creating a New Global Leader in
Silver" on the website. Shareholder meeting circulars, which will
incorporate material information related to the Transaction, are
expected to be mailed to shareholders of Tahoe and Pan American on
or about December 6, 2018.
About Pan American Silver
Pan American Silver Corp. is the world’s second largest primary
silver producer, providing enhanced exposure to silver through a
diversified portfolio of assets, large reserves and growing
production. We own and operate six mines in Mexico, Peru, Argentina
and Bolivia. Pan American Silver maintains a strong balance sheet,
has an established management team with proven operating expertise,
and is committed to responsible development. Founded in 1994, the
Company is headquartered in Vancouver, B.C. and our shares trade on
NASDAQ and the Toronto Stock Exchange under the symbol "PAAS".
For more information, visit: www.panamericansilver.com.
About Tahoe Resources
Tahoe Resources is a mid-tier precious metals company with a
diverse portfolio of mines and projects in Canada, Guatemala and
Peru. Tahoe is led by experienced mining professionals dedicated to
creating sustainable value for all of its stakeholders through
responsible mining. The company is listed on the TSX (“THO”) and
NYSE (“TAHO”) and is a member of the S&P/TSX Composite, the TSX
Global Mining indices and the Russell 2000 on the NYSE.
Cautionary Note Regarding Forward-Looking Statements and
Information
Certain of the statements and information in this news release
constitute "forward-looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
"forward-looking information" within the meaning of applicable
Canadian provincial securities laws. All statements, other than
statements of historical fact, are forward-looking statements or
information. Forward-looking statements or information in this news
release relate to, among other things, the anticipated completion
of the Transaction and timing for such completion, operating
metrics, growth profile and opportunities, completion of the ILO
169 consultation process, community engagement and re-issuance of
licenses and permits to enable the restart of the Escobal mine and
production from such mine, first commercial shipment of concentrate
from Escobal following restart of operations and the conversion and
exchange of the CVRs following such an event, expansion of the La
Colorada mine, the development of Navidad, access to capital,
potential non-core asset sales and timing for such sales, operating
synergies, sources and impact of funding of the Transaction,
approval of the Transaction by Tahoe and Pan American shareholders,
operating margins, shareholder returns, cost profile, obtaining
regulatory approvals, closing conditions for the Transaction being
met; the dates for the Tahoe and Pan American shareholder meetings,
and the applicability of the exemption under Section 3(a)(10) of
the Securities Act to the securities issuable in the Transaction.
These forward-looking statements and information reflect Pan
American and Tahoe's current views with respect to future events
and are necessarily based upon a number of assumptions that, while
considered reasonable by Pan American and Tahoe, are inherently
subject to significant operational, business, economic and
regulatory uncertainties and contingencies.
The Company cautions the reader that forward-looking statements
and information involve known and unknown risks, uncertainties and
other factors that may cause actual results and developments to
differ materially from those expressed or implied by such
forward-looking statements or information contained in this news
release and the Company has made assumptions and estimates based on
or related to many of these factors. Among the key factors that
could cause actual results to differ materially from those
projected in the forward-looking information are the following: the
ability to consummate the Transaction; the ability to obtain
requisite regulatory and shareholder approvals and the satisfaction
of other conditions to the consummation of the Transaction on the
proposed terms and schedule; the ability of the parties to
successfully integrate the operations and employees and realize
synergies and cost savings at the times, and to the extent,
anticipated; the potential impact on exploration activities; the
potential impact of the announcement or consummation of the
Transaction on relationships, including with regulatory bodies,
employees, suppliers, customers and competitors; changes in general
economic, business and political conditions, including changes in
the financial markets; changes in applicable laws; compliance with
extensive government regulation; and the diversion of management
time on the Transaction.
Certain of these factors are identified under the caption "Risks
Related to Pan American's Business" in the Company's most recent
form 40-F and Annual Information Form filed with the United States
Securities and Exchange Commission and Canadian provincial
securities regulatory authorities, respectively. Although the
Company has attempted to identify important factors that could
cause actual results to differ materially, there may be other
factors that cause results not to be as anticipated, estimated,
described or intended. Investors are cautioned against undue
reliance on forward-looking statements or information.
Forward-looking statements and information are designed to help
readers understand management's current views of our near and
longer term prospects and may not be appropriate for other
purposes. The Company does not intend, nor does it assume any
obligation to update or revise forward-looking statements or
information, whether as a result of new information, changes in
assumptions, future events or otherwise, except to the extent
required by applicable law.
Cautionary Note to US Investors
This news release has been prepared in accordance with the
requirements of Canadian National Instrument 43-101 - Standards of
Disclosure for Mineral Projects (‘‘NI 43-101’’) and the Canadian
Institute of Mining, Metallurgy and Petroleum Definition Standards,
which differ from the requirements of U.S. securities laws. NI
43-101 is a rule developed by the Canadian Securities
Administrators that establishes standards for all public disclosure
an issuer makes of scientific and technical information concerning
mineral projects.
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version on businesswire.com: https://www.businesswire.com/news/home/20181114005346/en/
For more information contact:Pan American SilverSiren
Fisekci, Vice President, Investor Relations & Corporate
CommunicationsPh: +1 604-806-3191Email:
ir@panamericansilver.comorTahoe ResourcesAlexandra Barrows, Vice
President Investor RelationsPh: +1 775-448-5812Email:
abarrows@tahoeresources.comorFor media-related inquiries
contact:CLP StrategiesBrian CattellPh: +1 917-280-5455+1
646-569-5504Email: bcattell@clpstrategies.com
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