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03-17-2006, 09:00 AM
Asia Pacific Enters Into Pre-Acquisition Agreement For Cash Take-Over Bid
2006-03-17 08:57 ET - News Release
TORONTO -- (Business Wire) -- March 17, 2006
Asia Pacific Resources Ltd. (TSX:APQ)(FRANKFURT AND
STUTTGART STOCK EXCHANGES:APQ)(OTCBB:APQCF) announces that it has
entered into a pre-acquisition agreement with SRMT Holdings Limited
(the "Offeror"), a New Brunswick corporation related to Italian-Thai
Development Public Company Limited ("ITD"), a public company
domiciled in the Kingdom of Thailand.
Pursuant to the pre-acquisition agreement, and subject to the
terms and conditions thereof, the Offeror will make an offer to
purchase (the "Offer") not less than two-thirds of the common shares
of Asia Pacific (including common shares issuable upon the exercise
of outstanding options and warrants) for a price of C$0.1425 per
share. The offer price represents a 35.7% premium to the closing
price on the Toronto Stock Exchange on the day before the
pre-acquisition agreement was executed. The Offeror will also offer
to purchase the warrants of Asia Pacific for a price of $0.0175 per
warrant (being the difference between the offer price for the common
shares and the exercise price of the warrants). The warrants
currently will expire on May 26, 2006. However, the pre-acquisition
agreement contemplates that the expiry date of the warrants can be
extended in certain circumstances, subject to regulatory approval.
The Offer will be made for common shares and warrants
(collectively the "Sought Securities") to all holders in Canada, the
United States, the Cayman Islands (see the description of the support
agreement below) and elsewhere in the Offeror's discretion. The
pre-acquisition agreement contemplates that the Offeror will have 21
days to provide to Asia Pacific copies of a standby letter of credit
or other form of recognized documentary credit demonstrating the
ability to pay for the Sought Securities deposited under the Offer as
well as approval of the Bank of Thailand for the foreign exchange to
make the Offer and that the Offer will be mailed to shareholders
within 37 days (subject to a maximum extension of 15 business days,
if necessary, to enable Asia Pacific to satisfy the condition
precedents to making the Offer, and a further maximum period of 5
business days for the Offeror to finalise the offer documentation).
If either of the foregoing does not occur within the specified time
period, Asia Pacific will have the right to terminate the
pre-acquisition agreement.
If the Offer is made for all of the common shares and, within 120
days of the Offer, it has been accepted by the holders of not less
than 90% of the outstanding common shares (other than common shares
held by the Offeror and its affiliates), the pre-acquisition
agreement states that the Offeror presently intends to acquire the
remaining common shares pursuant to the compulsory acquisition
provisions of the New Brunswick Business Corporations Act. In
addition, if the statutory right of acquisition is not available, the
pre-acquisition agreement states that the Offeror intends, to the
extent possible, to pursue other means of acquiring the common shares
not deposited under the Offer.
John Bovard, President and Chief Executive Officer of Asia
Pacific said that "Asia Pacific has said for the past two years that
it was pursuing commercial discussions with parties in Asia for the
development of its potash resources in Udon Thani, in northeast
Thailand. In particular Asia Pacific has sought interested parties
with access to capital and to development resources that can expedite
approval of the mining license and subsequent construction of, and
production from, this valuable resource."
Mr. Bovard continued, "it has been increasingly apparent that
obtaining a mining license for this project in Thailand requires a
degree of local knowledge and financial capability which a company
like ITD possesses."
"We are, therefore, pleased to announce this transaction. The
Offeror will make an all cash takeover bid for a minimum of 66.66% of
the shares of Asia Pacific at a price which represents a 26% premium
to the 20 day weighted average price. Upon successful completion of
the Offer, the project will be controlled by a company associated
with ITD, a public company in Thailand that has the resources and
capability to take the project forward. For Asia Pacific this has
meant a change of direction but will allow shareholders to realise
value at a premium to market price."
Mr. Bovard added that "ITD is a pre-eminent Thai and
international civil and infrastructure contractor that has over
thirty years experience in the mining industry. They have set very
high standards for mining works and have been actively pursuing
opportunities to participate in mining projects both within Thailand
and the neighboring countries."
Under the pre-acquisition agreement, the obligation of the
Offeror to make the Offer is subject to certain conditions precedent.
These conditions include, among other things (i) the board of
directors of Asia Pacific having received a written opinion from an
independent third party confirming that the Offer is fair from a
financial point of view to the holders of the Sought Securities,
having unanimously determined that the Offer is fair to the holders
of Sought Securities and having unanimously determined to recommend
that holders of Sought Securities accept the Offer, (ii) Olympus
Capital Holdings Asia I ("Olympus"), LP having entered into a
support-up agreement pursuant to which, subject to the terms and
conditions set forth therein, Olympus will agree to deposit all
Sought Securities held by it under the Offer and not withdraw them
except in accordance therewith, (iii) all options to purchase common
shares having become immediately exercisable and the holders thereof
being permitted to surrender such options to Asia Pacific in
consideration for a cash payment equal to the difference between the
offer price and the option exercise price, (iv) all of the
representations and warranties of Asia Pacific set out in the
pre-acquisition agreement being true and correct in all material
respects at the date of the Offer and all covenants and obligations
of the Asia Pacific set out therein having been complied with at the
date of the Offer, and (v) from the date of the pre-acquisition
agreement to the date of the Offer, there having been no material
adverse change relating to Asia Pacific's properties and assets.
With respect to condition precedent (i) above, the board of
directors has received the verbal opinion from Paradigm Capital Inc.
and expects to receive the written opinion in a timely manner, that
the Offer is fair from a financial point of view to the holders of
the Sought Securities. Based upon that opinion, the advice of Asia
Pacific's outside Canadian counsel and other factors to be described
in the directors' circular to be sent to shareholders (including the
35.7% premium to the most recent closing price and 26% premium to the
20 day weighted average price), the board of directors has
unanimously determined that the Offer is fair to the holders of
Sought Securities and has determined to recommend in the directors'
circular that holders of Sought Securities accept the Offer.
With respect to condition precedent (ii) above, concurrent with
the execution of the pre-acquisition agreement the Offeror entered
into a support agreement with Olympus, a Cayman Island based private
investment fund which owns approximately 46.4% of the outstanding
common shares and warrants to acquire approximately 27.8 million
common shares, pursuant to which Olympus has agreed to deposit all of
such common shares and warrants under the Offer not later than three
business days after the Offer is mailed and not to withdraw such
securities under any circumstances except if the support agreement is
terminated prior to such securities being taken up by the Offeror.
Olympus has agreed that, unless the Offeror has not taken up and paid
for the warrants deposited under the Offer prior to May 19, 2006 or
in order to repay any interim funding which may be provided by
Olympus to Asia Pacific, it will not exercise the warrants and will
be entitled to receive only the difference between the offer price
and the warrant exercise price. Any common shares received by Olympus
upon the exercise of warrants are required to be immediately
deposited under the Offer. Pursuant to the support agreement, Olympus
has agreed that it will not take any action which might directly or
indirectly interfere with or be inconsistent with or otherwise
adversely affect the Offer or the Offeror's ability to make the Offer
or take up and pay for Sought Securities deposited under the Offer.
In particular, Olympus has agreed, among other things, that it will
not, directly or indirectly, solicit, initiate or encourage proposals
or offers and will not participate in any negotiations regarding or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt with respect to, the
disposition of all or any portion of Asia Pacific's business or
assets, the acquisition of all or a portion of Asia Pacific's
outstanding shares, or the merger, amalgamation or reorganization of
Asia Pacific. If Olympus breaches in a material respect its
obligation to deposit its securities under the Offer or the foregoing
provision, it will be required to pay the Offeror a termination fee
equal to $1,500,000 unless the Offeror has taken up and paid for
Sought Securities under the Offer or to the extent that the Offeror
has received the Asia Pacific Termination Fee (as defined below). The
support agreement will terminate automatically upon the termination
of the pre-acquisition agreement.
The pre-acquisition agreement contains comprehensive
representations and warranties relating to the business and affairs
of Asia Pacific and covenants generally to the effect that Asia
Pacific will conduct its business in the usual and ordinary course
consistent with past practice. The pre-acquisition agreement also
provides that the Offeror's obligations to take up and pay for Sought
Securities deposited under the Offer will be subject to specified
conditions. These conditions include, among other things, that (i) a
minimum of at least 66.66% of the outstanding common shares as at the
expiry time of the Offer shall have been validly deposited and not
withdrawn under the Offer, (ii) the pre-acquisition agreement shall
not have been terminated, (iii) the Offeror shall have determined,
acting reasonably, that no material right or property of Asia Pacific
or any of its subsidiaries has been impaired or otherwise materially
adversely affected by the Offer or taking up and purchasing Sought
Securities under the Offer, (iv) no proceeding or law would
reasonably be expected to have the effect of making the Offer or the
payment for the Sought Securities illegal or materially more costly
or prohibiting or materially limiting the Offeror's ownership or
operation of Asia Pacific or its subsidiaries, the ability of the
Offeror to exercise the full rights of ownership of the Sought
Securities or the ability of the Offeror to acquire the common shares
of Asia Pacific not deposited under the Offer, (v) no change in the
assets or liabilities of Asia Pacific or its subsidiaries has
occurred which would constitute a material adverse effect, (vi) Asia
Pacific is not in default, in any material respect of its obligations
under the pre-acquisition agreement, Asia Pacific's representations
and warranties are true and correct in all respects that are in the
aggregate not materially adverse to Asia Pacific and the covenants
and obligations of Asia Pacific have been complied with or performed
in all material respects, (vii) neither Asia Pacific nor any of its
subsidiaries has taken any action or failed to take any action
relating to its covenants in the pre-acquisition agreement that would
or would be reasonably likely to impair the availability to the
Offeror of certain increases in the adjusted cost base of Asia
Pacific's shares of its subsidiaries under section 88(1) of the
Income Tax Act (Canada); and (viii) any interim funding to be
provided to Asia Pacific by Olympus has been repaid.
The pre-acquisition agreement provides that Asia Pacific will not
(and will not permit its subsidiaries and will use reasonable best
efforts to ensure that its representatives do not) solicit, initiate,
or engage in discussions or negotiations, encourage submission of any
inquiries, proposals or offers by, or take any other action intended
or designed to facilitate the efforts of any third party
(collectively the "No Shop Covenant") relating to a Competing
Proposal. The term "Competing Proposal" is defined in the
pre-acquisition agreement to mean a bona fide written proposal from
an arm's length party that contemplates (i) the acquisition of, or
business combination with, Asia Pacific or any of its subsidiaries
(ii) the acquisition of any material portion of its or their assets,
(iii) any take-over bid or other purchase or acquisition of the
common shares that, if consummated, would result in the beneficial
ownership of 20% or more of the common shares, or (iv) any other
transaction, the consummation of which would reasonably be expected
to prevent or materially impede, interfere with or delay the taking
up and paying for the Sought Securities. If Asia Pacific becomes
aware of a Competing Proposal it is required to promptly notify the
Offeror.
If Asia Pacific receives an unsolicited written bona fide
Competing Proposal and the board of directors of Asia Pacific
determines in good faith that the Competing Proposal is a Superior
Proposal, Asia Pacific is required to promptly notify the Offeror. A
"Superior Proposal" is defined in the pre-acquisition agreement as a
Competing Proposal which (i) is a definitive proposal to acquire,
directly or indirectly, for consideration consisting of cash and/or
readily marketable securities either Sought Securities representing
not less than 20% of the outstanding common shares (on a
fully-diluted basis) or all or substantially all of the assets and
liabilities of Asia Pacific, (ii) the board of directors of Asia
Pacific has determined in good faith (after receiving a written
opinion of an independent financial adviser) that such proposal
provides consideration to securityholders that is at least 15%
greater than that provided under the Offer (after taking into account
any modifications thereof), and (iii) in the good faith judgment of
the board of directors of Asia Pacific, on the advice of an
independent financial adviser and outside legal counsel, is available
on conditions which are reasonably likely to be satisfied and the
transaction is reasonably likely to be consummated without
unreasonable delay. Upon the determination that a Competing Proposal
is a Superior Proposal, Asia Pacific is required to provide the
Offeror the right, for five business days, to match the Superior
Proposal by increasing the consideration payable under the Offer so
as to equal or exceed the consideration under the Superior Proposal.
Failing the Offeror matching the Superior Proposal, the board of
directors of Asia Pacific will have the right to proceed with the
Superior Proposal and terminate the pre-acquisition agreement,
subject to the payment to the Offeror of a termination fee of
$3,000,000 (the "Asia Pacific Termination Fee").
The pre-acquisition agreement may be terminated in certain
specified circumstances which are usual for agreements of its type.
However, termination in certain circumstances will require the
payment of the Asia Pacific Termination Fee or a termination fee by
the Offeror. The Asia Pacific Termination Fee will be payable, among
other things, if (i) the board of directors of Asia Pacific fails to
unanimously determine that the Offer would be in the best interests
of Asia Pacific, determine that the Offer is fair to securityholders
from a financial point of view and recommend acceptance of the Offer
to securityholders, withdraws or modifies any of the foregoing
determinations or recommendation, approves or recommends a Competing
Proposal or Superior Proposal, or permits or causes Asia Pacific to
enter into an agreement with respect to a Competing Proposal or
Superior Proposal, (ii) a Competing Proposal or Superior Proposal is
publicly announced or made and the board of directors of Asia Pacific
fails to reaffirm its recommendation within three business days of
the end of the five business day matching period and, if applicable,
in a directors' circular within 10 days after the mailing of such
Competing Proposal, the board of directors of Asia Pacific withdraws
or modifies its recommendation of the Offer in a manner adverse to
the Offeror or the Offer, (iii) Asia Pacific breaches in a material
respect the No Shop Covenant, or (iv) Asia Pacific takes any action
or fails to take any action relating to its covenants in the
pre-acquisition agreement that would or would be reasonably likely to
impair the availability to the Offeror of the increases in the
adjusted cost base of the shares of certain Asia Pacific
subsidiaries. The Offeror will be required to pay Asia Pacific (i) a
termination fee of $1,500,000 if the Offeror fails to make the Offer
in accordance with the prescribed time period (other than by reason
of the non-fulfillment of a condition precedent to making the Offer),
and (ii) a termination fee of $3,000,000 if the Offeror makes the
Offer but subsequently withdraws it in circumstances where none of
the Asia Pacific Termination Fee events have occurred or all
conditions to the obligation of the Offeror to take up and pay for
Sought Securities under the Offer have been met or waived but the
Offeror fails to take up and purchase Sought Securities deposited
under the Offer in accordance with applicable securities laws;
subject to the limitation that the maximum termination fee the
Offeror will be liable for is C$3,000,000.
Asia Pacific Resources Ltd. (TSX:APQ) (FRANKFURT:APQ) (OTC
Bulletin Board:APQCF)
Contacts:
The Sherbourne Group
Forbes West
(416) 203-2200
forbes@sherbournegroup.ca
2006-03-17 08:57 ET - News Release
TORONTO -- (Business Wire) -- March 17, 2006
Asia Pacific Resources Ltd. (TSX:APQ)(FRANKFURT AND
STUTTGART STOCK EXCHANGES:APQ)(OTCBB:APQCF) announces that it has
entered into a pre-acquisition agreement with SRMT Holdings Limited
(the "Offeror"), a New Brunswick corporation related to Italian-Thai
Development Public Company Limited ("ITD"), a public company
domiciled in the Kingdom of Thailand.
Pursuant to the pre-acquisition agreement, and subject to the
terms and conditions thereof, the Offeror will make an offer to
purchase (the "Offer") not less than two-thirds of the common shares
of Asia Pacific (including common shares issuable upon the exercise
of outstanding options and warrants) for a price of C$0.1425 per
share. The offer price represents a 35.7% premium to the closing
price on the Toronto Stock Exchange on the day before the
pre-acquisition agreement was executed. The Offeror will also offer
to purchase the warrants of Asia Pacific for a price of $0.0175 per
warrant (being the difference between the offer price for the common
shares and the exercise price of the warrants). The warrants
currently will expire on May 26, 2006. However, the pre-acquisition
agreement contemplates that the expiry date of the warrants can be
extended in certain circumstances, subject to regulatory approval.
The Offer will be made for common shares and warrants
(collectively the "Sought Securities") to all holders in Canada, the
United States, the Cayman Islands (see the description of the support
agreement below) and elsewhere in the Offeror's discretion. The
pre-acquisition agreement contemplates that the Offeror will have 21
days to provide to Asia Pacific copies of a standby letter of credit
or other form of recognized documentary credit demonstrating the
ability to pay for the Sought Securities deposited under the Offer as
well as approval of the Bank of Thailand for the foreign exchange to
make the Offer and that the Offer will be mailed to shareholders
within 37 days (subject to a maximum extension of 15 business days,
if necessary, to enable Asia Pacific to satisfy the condition
precedents to making the Offer, and a further maximum period of 5
business days for the Offeror to finalise the offer documentation).
If either of the foregoing does not occur within the specified time
period, Asia Pacific will have the right to terminate the
pre-acquisition agreement.
If the Offer is made for all of the common shares and, within 120
days of the Offer, it has been accepted by the holders of not less
than 90% of the outstanding common shares (other than common shares
held by the Offeror and its affiliates), the pre-acquisition
agreement states that the Offeror presently intends to acquire the
remaining common shares pursuant to the compulsory acquisition
provisions of the New Brunswick Business Corporations Act. In
addition, if the statutory right of acquisition is not available, the
pre-acquisition agreement states that the Offeror intends, to the
extent possible, to pursue other means of acquiring the common shares
not deposited under the Offer.
John Bovard, President and Chief Executive Officer of Asia
Pacific said that "Asia Pacific has said for the past two years that
it was pursuing commercial discussions with parties in Asia for the
development of its potash resources in Udon Thani, in northeast
Thailand. In particular Asia Pacific has sought interested parties
with access to capital and to development resources that can expedite
approval of the mining license and subsequent construction of, and
production from, this valuable resource."
Mr. Bovard continued, "it has been increasingly apparent that
obtaining a mining license for this project in Thailand requires a
degree of local knowledge and financial capability which a company
like ITD possesses."
"We are, therefore, pleased to announce this transaction. The
Offeror will make an all cash takeover bid for a minimum of 66.66% of
the shares of Asia Pacific at a price which represents a 26% premium
to the 20 day weighted average price. Upon successful completion of
the Offer, the project will be controlled by a company associated
with ITD, a public company in Thailand that has the resources and
capability to take the project forward. For Asia Pacific this has
meant a change of direction but will allow shareholders to realise
value at a premium to market price."
Mr. Bovard added that "ITD is a pre-eminent Thai and
international civil and infrastructure contractor that has over
thirty years experience in the mining industry. They have set very
high standards for mining works and have been actively pursuing
opportunities to participate in mining projects both within Thailand
and the neighboring countries."
Under the pre-acquisition agreement, the obligation of the
Offeror to make the Offer is subject to certain conditions precedent.
These conditions include, among other things (i) the board of
directors of Asia Pacific having received a written opinion from an
independent third party confirming that the Offer is fair from a
financial point of view to the holders of the Sought Securities,
having unanimously determined that the Offer is fair to the holders
of Sought Securities and having unanimously determined to recommend
that holders of Sought Securities accept the Offer, (ii) Olympus
Capital Holdings Asia I ("Olympus"), LP having entered into a
support-up agreement pursuant to which, subject to the terms and
conditions set forth therein, Olympus will agree to deposit all
Sought Securities held by it under the Offer and not withdraw them
except in accordance therewith, (iii) all options to purchase common
shares having become immediately exercisable and the holders thereof
being permitted to surrender such options to Asia Pacific in
consideration for a cash payment equal to the difference between the
offer price and the option exercise price, (iv) all of the
representations and warranties of Asia Pacific set out in the
pre-acquisition agreement being true and correct in all material
respects at the date of the Offer and all covenants and obligations
of the Asia Pacific set out therein having been complied with at the
date of the Offer, and (v) from the date of the pre-acquisition
agreement to the date of the Offer, there having been no material
adverse change relating to Asia Pacific's properties and assets.
With respect to condition precedent (i) above, the board of
directors has received the verbal opinion from Paradigm Capital Inc.
and expects to receive the written opinion in a timely manner, that
the Offer is fair from a financial point of view to the holders of
the Sought Securities. Based upon that opinion, the advice of Asia
Pacific's outside Canadian counsel and other factors to be described
in the directors' circular to be sent to shareholders (including the
35.7% premium to the most recent closing price and 26% premium to the
20 day weighted average price), the board of directors has
unanimously determined that the Offer is fair to the holders of
Sought Securities and has determined to recommend in the directors'
circular that holders of Sought Securities accept the Offer.
With respect to condition precedent (ii) above, concurrent with
the execution of the pre-acquisition agreement the Offeror entered
into a support agreement with Olympus, a Cayman Island based private
investment fund which owns approximately 46.4% of the outstanding
common shares and warrants to acquire approximately 27.8 million
common shares, pursuant to which Olympus has agreed to deposit all of
such common shares and warrants under the Offer not later than three
business days after the Offer is mailed and not to withdraw such
securities under any circumstances except if the support agreement is
terminated prior to such securities being taken up by the Offeror.
Olympus has agreed that, unless the Offeror has not taken up and paid
for the warrants deposited under the Offer prior to May 19, 2006 or
in order to repay any interim funding which may be provided by
Olympus to Asia Pacific, it will not exercise the warrants and will
be entitled to receive only the difference between the offer price
and the warrant exercise price. Any common shares received by Olympus
upon the exercise of warrants are required to be immediately
deposited under the Offer. Pursuant to the support agreement, Olympus
has agreed that it will not take any action which might directly or
indirectly interfere with or be inconsistent with or otherwise
adversely affect the Offer or the Offeror's ability to make the Offer
or take up and pay for Sought Securities deposited under the Offer.
In particular, Olympus has agreed, among other things, that it will
not, directly or indirectly, solicit, initiate or encourage proposals
or offers and will not participate in any negotiations regarding or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt with respect to, the
disposition of all or any portion of Asia Pacific's business or
assets, the acquisition of all or a portion of Asia Pacific's
outstanding shares, or the merger, amalgamation or reorganization of
Asia Pacific. If Olympus breaches in a material respect its
obligation to deposit its securities under the Offer or the foregoing
provision, it will be required to pay the Offeror a termination fee
equal to $1,500,000 unless the Offeror has taken up and paid for
Sought Securities under the Offer or to the extent that the Offeror
has received the Asia Pacific Termination Fee (as defined below). The
support agreement will terminate automatically upon the termination
of the pre-acquisition agreement.
The pre-acquisition agreement contains comprehensive
representations and warranties relating to the business and affairs
of Asia Pacific and covenants generally to the effect that Asia
Pacific will conduct its business in the usual and ordinary course
consistent with past practice. The pre-acquisition agreement also
provides that the Offeror's obligations to take up and pay for Sought
Securities deposited under the Offer will be subject to specified
conditions. These conditions include, among other things, that (i) a
minimum of at least 66.66% of the outstanding common shares as at the
expiry time of the Offer shall have been validly deposited and not
withdrawn under the Offer, (ii) the pre-acquisition agreement shall
not have been terminated, (iii) the Offeror shall have determined,
acting reasonably, that no material right or property of Asia Pacific
or any of its subsidiaries has been impaired or otherwise materially
adversely affected by the Offer or taking up and purchasing Sought
Securities under the Offer, (iv) no proceeding or law would
reasonably be expected to have the effect of making the Offer or the
payment for the Sought Securities illegal or materially more costly
or prohibiting or materially limiting the Offeror's ownership or
operation of Asia Pacific or its subsidiaries, the ability of the
Offeror to exercise the full rights of ownership of the Sought
Securities or the ability of the Offeror to acquire the common shares
of Asia Pacific not deposited under the Offer, (v) no change in the
assets or liabilities of Asia Pacific or its subsidiaries has
occurred which would constitute a material adverse effect, (vi) Asia
Pacific is not in default, in any material respect of its obligations
under the pre-acquisition agreement, Asia Pacific's representations
and warranties are true and correct in all respects that are in the
aggregate not materially adverse to Asia Pacific and the covenants
and obligations of Asia Pacific have been complied with or performed
in all material respects, (vii) neither Asia Pacific nor any of its
subsidiaries has taken any action or failed to take any action
relating to its covenants in the pre-acquisition agreement that would
or would be reasonably likely to impair the availability to the
Offeror of certain increases in the adjusted cost base of Asia
Pacific's shares of its subsidiaries under section 88(1) of the
Income Tax Act (Canada); and (viii) any interim funding to be
provided to Asia Pacific by Olympus has been repaid.
The pre-acquisition agreement provides that Asia Pacific will not
(and will not permit its subsidiaries and will use reasonable best
efforts to ensure that its representatives do not) solicit, initiate,
or engage in discussions or negotiations, encourage submission of any
inquiries, proposals or offers by, or take any other action intended
or designed to facilitate the efforts of any third party
(collectively the "No Shop Covenant") relating to a Competing
Proposal. The term "Competing Proposal" is defined in the
pre-acquisition agreement to mean a bona fide written proposal from
an arm's length party that contemplates (i) the acquisition of, or
business combination with, Asia Pacific or any of its subsidiaries
(ii) the acquisition of any material portion of its or their assets,
(iii) any take-over bid or other purchase or acquisition of the
common shares that, if consummated, would result in the beneficial
ownership of 20% or more of the common shares, or (iv) any other
transaction, the consummation of which would reasonably be expected
to prevent or materially impede, interfere with or delay the taking
up and paying for the Sought Securities. If Asia Pacific becomes
aware of a Competing Proposal it is required to promptly notify the
Offeror.
If Asia Pacific receives an unsolicited written bona fide
Competing Proposal and the board of directors of Asia Pacific
determines in good faith that the Competing Proposal is a Superior
Proposal, Asia Pacific is required to promptly notify the Offeror. A
"Superior Proposal" is defined in the pre-acquisition agreement as a
Competing Proposal which (i) is a definitive proposal to acquire,
directly or indirectly, for consideration consisting of cash and/or
readily marketable securities either Sought Securities representing
not less than 20% of the outstanding common shares (on a
fully-diluted basis) or all or substantially all of the assets and
liabilities of Asia Pacific, (ii) the board of directors of Asia
Pacific has determined in good faith (after receiving a written
opinion of an independent financial adviser) that such proposal
provides consideration to securityholders that is at least 15%
greater than that provided under the Offer (after taking into account
any modifications thereof), and (iii) in the good faith judgment of
the board of directors of Asia Pacific, on the advice of an
independent financial adviser and outside legal counsel, is available
on conditions which are reasonably likely to be satisfied and the
transaction is reasonably likely to be consummated without
unreasonable delay. Upon the determination that a Competing Proposal
is a Superior Proposal, Asia Pacific is required to provide the
Offeror the right, for five business days, to match the Superior
Proposal by increasing the consideration payable under the Offer so
as to equal or exceed the consideration under the Superior Proposal.
Failing the Offeror matching the Superior Proposal, the board of
directors of Asia Pacific will have the right to proceed with the
Superior Proposal and terminate the pre-acquisition agreement,
subject to the payment to the Offeror of a termination fee of
$3,000,000 (the "Asia Pacific Termination Fee").
The pre-acquisition agreement may be terminated in certain
specified circumstances which are usual for agreements of its type.
However, termination in certain circumstances will require the
payment of the Asia Pacific Termination Fee or a termination fee by
the Offeror. The Asia Pacific Termination Fee will be payable, among
other things, if (i) the board of directors of Asia Pacific fails to
unanimously determine that the Offer would be in the best interests
of Asia Pacific, determine that the Offer is fair to securityholders
from a financial point of view and recommend acceptance of the Offer
to securityholders, withdraws or modifies any of the foregoing
determinations or recommendation, approves or recommends a Competing
Proposal or Superior Proposal, or permits or causes Asia Pacific to
enter into an agreement with respect to a Competing Proposal or
Superior Proposal, (ii) a Competing Proposal or Superior Proposal is
publicly announced or made and the board of directors of Asia Pacific
fails to reaffirm its recommendation within three business days of
the end of the five business day matching period and, if applicable,
in a directors' circular within 10 days after the mailing of such
Competing Proposal, the board of directors of Asia Pacific withdraws
or modifies its recommendation of the Offer in a manner adverse to
the Offeror or the Offer, (iii) Asia Pacific breaches in a material
respect the No Shop Covenant, or (iv) Asia Pacific takes any action
or fails to take any action relating to its covenants in the
pre-acquisition agreement that would or would be reasonably likely to
impair the availability to the Offeror of the increases in the
adjusted cost base of the shares of certain Asia Pacific
subsidiaries. The Offeror will be required to pay Asia Pacific (i) a
termination fee of $1,500,000 if the Offeror fails to make the Offer
in accordance with the prescribed time period (other than by reason
of the non-fulfillment of a condition precedent to making the Offer),
and (ii) a termination fee of $3,000,000 if the Offeror makes the
Offer but subsequently withdraws it in circumstances where none of
the Asia Pacific Termination Fee events have occurred or all
conditions to the obligation of the Offeror to take up and pay for
Sought Securities under the Offer have been met or waived but the
Offeror fails to take up and purchase Sought Securities deposited
under the Offer in accordance with applicable securities laws;
subject to the limitation that the maximum termination fee the
Offeror will be liable for is C$3,000,000.
Asia Pacific Resources Ltd. (TSX:APQ) (FRANKFURT:APQ) (OTC
Bulletin Board:APQCF)
Contacts:
The Sherbourne Group
Forbes West
(416) 203-2200
forbes@sherbournegroup.ca