VANCOUVER, Nov. 14, 2018 /PRNewswire/ - 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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SOURCE Pan American Silver Corp.