Boliden (BOL-T) has bowed to the pressure of legal action and signed an agreement to sell the Lomas Bayas copper project and adjacent Fortuna de Cobre copper deposits in Chile to Falconbridge (FL-T).
In mid-May, Boliden pulled out of a sale agreement with Noranda (NOR-T) and affiliate Falconbridge (FL-T) after financiers said keeping them was a condition of a bail-out package. After discussions with the financiers, Boliden decided that the risks and uncertainties related to the claims for specific performance and damages made by Noranda and Falco outweighed the benefits to be gained by keeping the assets.
Soon thereafter, Noranda and Falco filed suit in the Ontario Superior Court of Justice seeking a declaration from the court that binding agreements exist between them and Boliden for the sale of the assets, and a court order compelling Boliden to complete the sale. The two also filed for C$250 million in damages.
Boliden says that a condition of the sale is that lawsuit be dropped. Noranda and Falconbridge have agreed to do so.
The sale will take place under the same terms agreed to in the letter of intent signed by the parties in February; namely US$175 million in cash, less outstanding third-party debt obligations of US$112.7 million, plus a further US$15 million should Falconbridge exercise their right to the Fortuna de Cobre copper deposit within five years.
Boliden also notes that it has received most of the approvals for its proposed restructuring and expects to receive the remaining approvals soon.
The announcement sent Boliden stock down 12 or 15% to 68 in early trade on the Toronto Stock Exchange on Friday. For their part, Noranda and Falco were off 19 and 5 at $16.55 and $18.80, respectively.
The transaction is expected to close by the end of July and is subject to receipt of all required regulatory approvals. Upon closing, Falconbridge will assume 100% ownership of the Lomas Bayas mine.
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