MONTREAL, QUEBEC -- (Marketwire) -- 10/21/09 -- Canadian Royalties Inc. (the "Company", or "Canadian Royalties")(TSX: CZZ) notes the announcement today by Jaguar Financial Corporation ("Jaguar") of its opposition to the offers (the "Jien Offers") made by Jien Canada Mining Ltd. ("Jien") to acquire all of the issued and outstanding common shares (the "Shares") and all of the 7% Convertible Senior Unsecured Debentures due March 31, 2015 (the "Debentures") of Canadian Royalties for $0.80 per Share (the "Share Offer") and $800 per $1,000 principal amount of Debentures, plus accrued and unpaid interest up to, but excluding, the date the Debentures are taken up under the Jien Offers (the "Debenture Offer"). Canadian Royalties is particularly alarmed at the apparent dissemination of misleading information by Jaguar.
In its release, Jaguar makes several statements which are wholly inaccurate despite all the relevant facts being readily available on the Company's website and through its disclosure on SEDAR. For the convenience of holders of Debentures ("Debentureholders") and Shares ("Shareholders") we address the misleading information below.
Misleading Information -
First, Jaguar alleges oppression by Jien in the face of the amended Jien Offers. Jaguar fails to recognize that the Jien Offers are just that, offers. Shareholders and Debentureholders have the option of tendering to both, either or neither and have been fully advised of the applicable conditions. The Board of Directors of Canadian Royalties (the "Board") has made every effort to ensure that all securityholders have the opportunity to respond to the Jien Offers and not to stand in the way of securityholder choice.
Second, Jaguar alleges that Debentureholders would receive 100 cents on the dollar in any event including insolvency. It is irresponsible for Jaguar to make such unfounded claims. There can be no guarantee that Debentureholders would receive 100 cents in all events for several reasons. There are risks associated with Debentures which impact their trading price. On August 6, 2009, the day prior to announcement of Jien's intention to acquire Canadian Royalties, the Debentures were trading at $300.50. The Debenture Offer represents a 162% premium to that trading price. In the event the Company was subject to insolvency proceedings, there would be significant additional risk to Debentureholders, as well as time and expense. It is not possible to predict full recovery in those circumstances and it is careless for Jaguar to suggest otherwise. Moreover, as Debentureholders are aware, the indenture for the Debentures dated March 18, 2008 (the "Indenture") provides, in Section 3.9, for a change of control payment of 101% of the principal amount of the Debentures. However, the Indenture also provides clear authority by way of Extraordinary Resolution to amend the Indenture.
Third, Jaguar implies that something more was on offer to holders of Debentures and that it was reallocated to holders of Shares. Consideration in excess of the Debenture Offer was never on offer.
Fourth, Jaguar has announced that it may make an alternative offer to acquire approximately 34% of the principal amount of the Debentures (including the Debentures already owned by Jaguar and certain other holders). If Jaguar believes that the Debentures should be paid 101% of the principal value of the Debentures then one might question why Jaguar would not make an offer for all of the outstanding Debentures.
Fifth, Jaguar appears to allege that proceeds of the Jien Offers were reallocated to compensate the Chief Executive Officer of Canadian Royalties. No better consideration was on offer to holders of Debentures. Furthermore, while the majority of directors and officers have indicated their intention to tender, Mr. Mullan has not entered into a lock-up agreement in respect of the Share Offer.
Sixth, Jaguar alleges that the BMO Capital Markets fairness opinion "effectively" addressed the fairness of the Debenture Offer. The Special Committee of the Board of Directors requested BMO Capital Markets to deliver an opinion as to the fairness of the Share Offer. The fairness opinion did not address the Debenture Offer, expressly or "effectively". We are advised that the opinion was rendered by BMO Capital Markets appropriately and consistently with industry standards.
Finally, what Jaguar fails to mention is that Vic Alboini, Jaguar's Chairman and CEO, asked subsequent to the launch of the amended Jien Offers on October 16, 2009 on behalf of another entity of which he is Chairman and CEO, if he could "act for the Company in some way to bring in the shares". After Canadian Royalties declined his services he issued this press release.
Facts Securityholders Should Know -
As described in the Notice:
- Canadian Royalties ran a comprehensive strategic alternatives process. To date the Jien Offers are the only offers before holders of Debentures and Shares;
- The Board of Directors of Canadian Royalties received a fairness opinion in relation to the Share Offer;
- The Board of Directors recommended to Shareholders that they tender to the Share Offer;
- The Board of Directors made no recommendation to Debentureholders;
- Debentureholders have been offered a significant premium for their Debentures;
- Debentureholders representing an aggregate $78,873,000 or approximately 57% of the principal value of the Debentures have entered into lock-up agreements or have agreed to tender their Debentures to the Debenture Offer; and
- Debentureholders and Shareholders have been given the opportunity to accept or reject the Jien Offers as they please.
The Jien Offers are set to expire at 5:00 P.M. (Toronto time) on October 27, 2009.
Canadian Royalties will draw the Jaguar announcement to the attention of securities regulators and is considering other action in light of the apparent deliberate dissemination of misleading information by Jaguar.
About Canadian Royalties and the Nunavik Nickel Project
Canadian Royalties, based in Val-d'Or - Quebec, is a mineral exploration company whose principal active area is along the South Trend located in the Raglan mining district of Northern Quebec's Nunavik Region. Since 2001, the Company has discovered and delineated several potentially mineable nickel-copper-cobalt-platinum-palladium-gold deposits which collectively form the Nunavik Nickel Project (the "Project"). The Company has completed a Bankable Feasibility Study and has received its Environmental Certificate of Authorization; it has also received mine leases for four sites, namely the Ivakkak, Mequillon, Expo, and Mesamax deposits. An Impact and Benefits Agreement ("IBA") has been entered into between the Company, three (3) Inuit communities, and Makivik Corporation, the non profit legal representative of the Inuit; the IBA constitutes the Company's formal commitment to ensure a fair and sustainable distribution of the economic benefits stemming from the Project. Development of the Project was initiated in 2007; the Project was subsequently put on care and maintenance as a result of the 2008 financial crisis. The Company's objective is to develop and exploit the mineral resources comprising the Project either independently or through a partnership.
This news release contains certain forward-looking statements or forward-looking information. These forward-looking statements are subject to a variety of risks and uncertainties beyond the Company's ability and control, which could cause actual events or results to differ materially from those anticipated in such forward-looking statements. Some of these risks and uncertainties are identified and disclosed under the heading "Risk Factors" in the Company's Annual Information Form for the year ended December 31, 2008. Accordingly, all of the forward-looking information contained in this press release is qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company, as expressed or implied by the forward-looking information, will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business operations,. All forward-looking statements speak only as of the date of this news release and the Company does not undertake any obligation to update or publicly disclose any revisions to such forward-looking statements to reflect events, circumstances or changes in expectations after the date hereof, except as required by applicable securities law. Accordingly, readers should not place undue reliance on forward-looking statements.
Canadian Royalties Inc.
Glenn J. Mullan
Chairman of the Board, and Chief Executive Officer
514-879-1688, ext. 1222
Shareholders / Debentureholders:
Laurel Hill Advisory Group
North American Toll Free Number: 1-888-298-1523
Outside of North America: 1-416-637-4661
NATIONAL Public Relations Inc.
Cabinet de relations publiques NATIONAL inc.