$1.4-billion Falconbridge issue one of the largest in Canada

Strong base metal markets, particularly for nickel and copper, have helped a syndicate of underwriters float one of the largest Canadian equity issues of all time.

A prospectus for almost 72 million shares, worth nearly $1.4 billion, in Falconbridge was filed last week following an extensive promotional tour throughout North America and Europe.

Falconbridge was turned into a private entity in 1989 when Swedish resource company Trelleborg AB and Canadian resource giant Noranda (TSE) bought it for $2.9 billion.

The recent recession, both in North America and in Europe, depressed metal prices and prompted both companies to re-evaluate their ownership in Falconbridge.

Trelleborg decided it would like to lessen its interest in the company while Noranda opted to maintain its share. Noranda recently announced it will subscribe to almost 32 million shares, worth an estimated $560.5 million, thereby keeping a 46.4% interest, down slightly from 50%. Trelleborg will decrease its ownership to 28.3% from 50%, while the public will hold the remaining 25.3%.

Alex Balough, president of Noranda Minerals, summarized his company’s position by stating: “When you’re in the mining business and you’re involved with a great mining company (like Falconbridge), you don’t really want to give up your share.” Noranda will finance the purchase, borrowing US$300 million in the U.S. debt markets, with the remaining funds to be paid with cash on hand.

Falconbridge currently supplies almost 14% of the Western world’s nickel and about 2% of its copper from its Sudbury and Kidd Creek operations, both of which are in northern Ontario.

In addition, Falconbridge has two refineries, in Norway and the Dominican Republic. The company also has a 33.3% interest in the Collahuasi porphyry copper project in northern Chile and a 100% interest in the Raglan nickel-copper project in northern Quebec.