Update on Dividing KHD Into Two Entities
March 04 2010 - 11:17AM
PR Newswire (US)
NEW YORK, March 4 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag
International Ltd. ("KHD") announced on January 6, 2010 that it
intended to restructure KHD into two distinct legal entities
through the distribution to KHD's shareholders, on a pro rata
basis, of all the common shares of its subsidiary, KHD Humboldt
Wedag (Deutschland) AG ("KID") (the "Arrangement"). After the
Arrangement, it was expected that KHD would be divided into a
mineral royalty company and an industrial plant technology,
equipment and service company. KHD has now determined that the most
fiscally responsible way for KHD and its shareholders to effect the
distribution of the KID shares is in several tranches. This
structure will minimize the tax impact to KHD and its shareholders.
First Tranche Summary and Time Line - Receive one (1) KID share for
every three and half (3 1/2) KHD shares (calculated after a 2 for 1
forward split, subject to KID shareholder approval). - Additional
distributions of KID shares expected by the end of the year. -
Initial percentage of KID shares distributed 26% - Shareholders
meeting date for approval March 29, 2010 - Ex- dividend date March
30, 2010 - Distribution date of shares March 31, 2010 - Listing
date for KID shares on the Frankfurt Stock Exchange March 31, 2010
- Stock Symbol KWG.F To obtain greater liquidity and shareholder
awareness for the KID shares, KID will offer a placement of 10% of
its shares in Europe. To assist US citizens to trade the KID
shares, KHD is planning on establishing a level 1 American Deposit
Receipts (ADR) program in the United States. Under the current
structure, the mineral royalty company would change its name from
KHD to Terra Nova Royalty Corporation ("Terra Nova") and will focus
on: -- the acquisition of existing mineral royalties; -- providing
capital for the exploration, development and construction of iron
ore and other metals mines in exchange for royalties; -- monetizing
metal by-product streams from either operating mines or projects
under development; and -- providing acquisition financing to
established operating companies in return for a royalty on acquired
properties. Terra Nova intends to maintain its listing on the New
York Stock Exchange (the "NYSE") and will continue to trade the
"regular way." If all necessary conditions are satisfied, Terra
Nova expects that, in the future, it will no longer have to
consolidate KID in its financial results. Concurrently KID, which
will hold all of KHD's industrial plant technology, equipment and
service operations, will be listed on the regulated market of the
Frankfurt Stock Exchange (the "FSE"). Management will focus on
enhancing the traditional cement business through an expansion of
current activities in the rapidly growing Indian market. This
company will further strengthen its operational and management base
in New Delhi, India, as well as add additional resources in other
fast-growing emerging markets such as Russia. The company's main
engineering centre of excellence in Cologne, Germany will have a
primary focus on further developing the company's leading process
know-how and product engineering capabilities. The Company
commented, "We have studied various ways to increase value for
KHD's shareholders and we believe that through this transaction,
the sum of the parts has greater value than the whole." On March 1,
2010, KHD entered into an Arrangement Agreement with KID, effective
as of February 26, 2010, which sets out the terms under which KHD
and KID will effect the Arrangement. As previously announced, the
proposed Arrangement requires court approval under the provisions
of the British Columbia Business Corporations Act, as well as
approval by the shareholders of KHD and the satisfaction of other
statutory requirements customary for transactions of this type. On
March 1, 2010, KHD obtained an interim order from the Supreme Court
of British Columbia providing, amongst other things, for the
calling and holding of a special meeting (the "Meeting") of
shareholders of KHD to seek approval for the Arrangement. KHD
previously announced that it expected to hold the Meeting on March
22, 2010, however the Meeting will now be held on Monday, March 29,
2010 at 9:00 a.m. (Pacific time). Materials pertaining to the
Meeting, including a management information circular (the
"Information Circular"), will be mailed to the shareholders of KHD
on or about March 3, 2010. The Information Circular will be filed
with the Securities and Exchange Commission at http://www.sec.gov/
and with Canadian securities regulators on SEDAR at
http://www.sedar.com/ on March 3, 2010. About KHD Humboldt Wedag
International Ltd. KHD Humboldt Wedag International Ltd. owns
companies that operate internationally in the industrial plant
technology, equipment and service industry, and specializes in the
cement industry. To obtain further information about KHD, please
visit our website at http://www.khdhumboldt.com/ Disclaimer for
Forward-Looking Information Certain statements in this release are
forward-looking statements, which reflect the expectations of
management regarding KHD's planned restructuring. Forward-looking
statements consist of statements that are not purely historical,
including any statements regarding beliefs, plans, expectations or
intentions regarding the future. No assurance can be given that any
of the events anticipated by the forward-looking statements will
occur or, if they do occur, what benefits the Company will obtain
from them. These forward-looking statements reflect management's
current views and are based on certain assumptions. These
assumptions, which include management's current expectations,
estimates and assumptions about the potential benefits of the
Arrangement, the areas that the resulting legal entities will focus
on, the common shares of KID to be distributed to the shareholders
of KHD, and that the restructuring will increase value for KHD
shareholders, may prove to be incorrect. A number of risks and
uncertainties could cause our actual results to differ materially
from those expressed or implied by the forward-looking statements,
including: (1) the failure to obtain any necessary approvals for
the restructuring, (2) the timing and extent of the restructuring,
(3) potential negative financial impact from regulatory
investigations, claims, lawsuits and other legal proceedings and
challenges related to the restructuring, (4) a decrease in Wabush's
estimated reserves or mine life or in the Wabush royalty, (5) the
uncertainty of government regulation and politics in India and
other markets, (6) the inability to successfully expand in the
Indian market, (7) continuing decreased demand for our products,
including the renegotiation, delay and/or cancellation of projects
by our customers and the reduction in the number of project
opportunities, (8) a decrease in the demand for cement, minerals
and related products, (9) the number of competitors with
competitively priced products and services, (10) product
development or other initiatives by our competitors, (11) shifts in
industry capacity, (12) fluctuations in foreign exchange and
interest rates, (13) fluctuations in availability and cost of raw
materials or energy, (14) delays in the start of projects, (15)
delays in the implementation of projects and disputes regarding the
performance of our services, and (16) other factors beyond our
control. Additional information about these and other assumptions,
risks and uncertainties are set out in the "Risk Factors" section
in our Form 6-K filed with the Securities and Exchange Commission
and the "Risks and Uncertainties" section in our MD&A filed
with Canadian securities regulators. Contact Information: Allen
& Caron Inc. Joseph Allen (investors) 1 (212) 691-8087
joe@allencaron.com or Len Hall (media) 1 (949) 474-4300
len@allencaron.com Rene Randall KHD Humboldt Wedag International
Ltd. 1 (604) 683-8286 ex 224 randall.r@khd.de DATASOURCE: KHD
Humboldt Wedag CONTACT: investors, Joseph Allen, +1-212-691-8087,
joe@allencaron.com ormedia, Len Hall, +1-949-474-4300,
len@allencaron.com, both of Allen & CaronInc., for KHD Humboldt
Wedag; or Rene Randall of KHD Humboldt WedagInternational Ltd.,
+1-604-683-8286, ext. 224, randall.r@khd.de Web Site:
http://www.khdhumboldt.com/
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