Orko Announces Superior Proposal
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/13/13 -- Orko
Silver Corp. ("Orko" or the "Company") (TSX
VENTURE:OK)(PINKSHEETS:OKOFF)(FRANKFURT:OG3) announces that it has
received a binding proposal from Coeur d'Alene Mines Corporation
("Coeur") for the acquisition by Coeur of all of the issued and
outstanding common shares of Orko (the "Orko Shares") by way of a
plan of arrangement (the "Coeur Proposal"). The Board of Directors of
Orko (the "Orko Board") has unanimously determined, after receiving
the advice of its financial and legal advisors, that the Coeur
Proposal constitutes a "Superior Proposal" pursuant to the
arrangement agreement between Orko and First Majestic Silver Corp.
("First Majestic") originally announced on December 16, 2012 (the
"First Majestic Agreement") and has provided notice of such
determination to First Majestic.
Under the terms of the Coeur Proposal, Orko shareholders may elect to
receive in exchange for each Orko Share:
-- 0.0815 common shares of Coeur ("Coeur Shares") and C$0.70 cash and
0.01118 warrants to purchase Coeur Shares ("Coeur Warrants");
-- 0.1118 Coeur Shares and 0.01118 Coeur Warrants, subject to pro-ration as
to the number of Coeur Shares if the total number of Coeur Shares
elected by Orko shareholders exceeds approximately 11.6 million; or
-- C$2.60 in cash and 0.01118 Coeur Warrants, subject to pro-ration as to
the amount of cash if the total cash elected by Orko shareholders
exceeds C$100 million.
If all Orko shareholders were to elect either the all cash (and Coeur
Warrants) or the all share (and Coeur Warrants) alternative, each
Orko shareholder would receive 0.0815 Coeur Shares and C$0.70 in
cash, together with 0.01118 Coeur Warrants, for each Orko Share. Each
whole Coeur Warrant will be exercisable for one Coeur Share for a
period of four years at an exercise price of US$30.00, all subject to
adjustment in accordance with the terms of the Coeur Warrants.
Based on the closing price of Coeur Shares on the New York Stock
Exchange ("NYSE") on February 12, 2013 (and $0.08 of warrant value
per Orko Share), the Coeur Proposal implies a value of C$2.70 per
Orko Share. The Coeur Proposal represents a premium of approximately
25% to the implied valu
e of the consideration offered pursuant to the
First Majestic Agreement based on the February 12, 2013 closing price
of both Coeur and First Majestic's common shares on the NYSE and
Toronto Stock Exchange, respectively.
Except for the consideration being offered, the agreement proposed by
Coeur is substantially similar to the First Majestic Agreement,
including with respect to the treatment of outstanding options to
purchase common shares of the Company. The proposed agreement with
Coeur includes a termination fee, payable to Coeur in certain
circumstances, of C$11.6 million, consistent with the termination fee
payable to First Majestic under the First Majestic Agreement.
Under the terms of the First Majestic Agreement, First Majestic has a
period of five business days, expiring at 11:59 pm PT on Tuesday,
February 19, 2013 (the "Response Period"), during which to offer to
amend the terms of that agreement.
If, within the Response Period, First Majestic offers to amend the
First Majestic Agreement such that the Orko Board determines that the
Coeur Proposal is no longer a Superior Proposal, Orko will be
required to enter into an amendment to the First Majestic Agreement
and implement the amended agreement. In that circumstance, no
agreement will be entered into between Orko and Coeur with respect to
the transaction proposed by Coeur.
If, within the Response Period, First Majestic does not offer to
amend the First Majestic Agreement, or if the proposed Coeur
transaction continues to be a Superior Proposal following a proposed
amendment to the First Majestic Agreement by First Majestic, Orko
intends to pay First Majestic the agreed termination fee of C$11.6
million, terminate the First Majestic Agreement and enter into the
agreement proposed by Coeur. In that event, the directors and
officers of Orko will enter into lock-up agreements with respect to
the transaction proposed by Coeur (on substantially the same terms as
the lock-up agreements they entered into with First Majestic)
pursuant to which, among other things, they will agree to vote in
favour of the transaction proposed by Coeur at a special meeting of
securityholders of Orko to be called to consider such transaction.
In conjunction with the Coeur Proposal, Coeur has proposed to provide
Orko with an C$11.6 million convertible loan to finance the First
Majestic termination fee (the "Coeur Loan"). Orko would enter into
the Coeur Loan concurrently with the execution of the agreement
proposed by Coeur.
Advisors and Counsel
BMO Capital Markets and GMP Securities L.P. are acting as financial
advisors to Orko. Stikeman Elliott LLP is acting as legal advisor to
Orko. BMO Capital Markets and GMP Securities L.P. have each provided
an opinion to the Board of Directors of Orko to the effect that,
based upon and subject to the assumptions, limitations, and
qualifications in such opinions, the consideration to be received
pursuant to the agreement proposed by Coeur is fair, from a financial
point of view, to Orko shareholders.
Orko will issue further news releases providing additional
information as developments warrant, including information with
respect to any changes to the special meeting of securityholders of
Orko currently scheduled for February 20, 2013.
For further information, contact Orko Silver Corp. at 604.687.6310 or
via our website online at www.orkosilver.com.
Orko Silver Corp. is developing one of the world's largest
undeveloped primary silver deposits, La Preciosa, located near the
city of Durango, in the State of Durango, Mexico.
ON BEHALF OF THE BOARD OF ORKO SILVER CORP.
Gary Cope, President & CEO
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This News Release may contain forward-looking statements, including
but not limited to comments regarding the completion of the
transactions contemplated herein and the various steps thereto,
including filing and mailing of securityholder documents and holding
securityholder meetings, the value of Orko shares, the value or
liquidity of First Majestic shares and Coeur Shares, future growth
potential for Orko and its business, future mine development plans,
the price of silver and other metals, the accuracy of mineral
resource estimates, reasonable prospects of economic extraction of a
mineral resource, timing and content of upcoming work programs,
geological interpretations, receipt of property title, potential
mineral recovery processes, etc. Forward-looking statements address
future events and conditions and therefore involve inherent risks and
uncertainties. Actual results may differ materially from those
currently anticipated in such statements and Orko undertakes no
obligation to update such statements, except as required by law.
Orko's resource estimate is based on a geological model based on
interpretations of multiple veins in wide spaced drill holes. There
is risk that the interpreted continuity and orientation of the veins
could change with additional drilling. The sample values in the drill
core may not be representative of those portions of the deposit as
precious metal deposits are subject to nugget effect and rapid
changes to grade over relatively short distances. Sampling gaps in
the modelled veins may allow higher grade samples to be projected
into unsampled lower grade areas of the model. This could cause
overestimation of tonnes and grade. The converse is also true.
Density values of the blocks are based on a model that may not be
accurate and may cause local biases in tonnage estimates.
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
Orko Silver Corp.
President & CEO
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