On January 9, 2012, Teck Resources Limited (TSX: TCK.A, TCK.B, NYSE: TECK) (Teck) and SilverBirch Energy Corporation (TSX-V:SBE) (SilverBirch) announced that they entered into an agreement for Teck to acquire SilverBirch by way of a plan of arrangement. Under the arrangement, SilverBirch shareholders will receive C$8.50 in cash and one share of a new company, SilverWillow Energy Corporation (SilverWillow), per SilverBirch common share. SilverWillow will hold substantially all of the assets of SilverBirch other than SilverBirch’s 50% interest in the Frontier and Equinox oil sands project. In connection with the arrangement, Teck will contribute to SilverWillow C$25 million in working capital and its 50% interest in several oil sands leases that are currently jointly owned with SilverBirch. As a result, SilverWillow is expected to begin operations with approximately C$25 million in net working capital.
The cash portion of the consideration to SilverBirch shareholders represents a premium of approximately 31% to the 20-day volume weighted average price of SilverBirch common shares on the TSX Venture Exchange.
Teck and SilverBirch have entered into an agreement providing for, among other things, a non-solicitation covenant on the part of SilverBirch, subject to customary “fiduciary out” provisions that entitle SilverBirch to consider and accept a superior proposal, a right in favour of Teck to match any superior proposal and the payment to Teck of a termination payment of $20 million in certain circumstances. Teck owns approximately 9.4% of the outstanding SilverBirch shares.
The board of directors of SilverBirch has unanimously approved the transaction and has determined that the transaction is fair to SilverBirch’s shareholders and is in the best interests of SilverBirch and its shareholders. The SilverBirch board unanimously recommends that SilverBirch shareholders vote in favour of the arrangement. The transaction is expected to close on or before April 16, 2012.
Teck Resources is a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, steelmaking coal, zinc and energy.
SilverBirch Energy is a Canadian-based pre-production oil sands exploration and development company with assets in Alberta’s Athabasca oil sands area.
Further information can be found on SilverBirch Energy’s website.