Atlanta, GA 6/18/12 (StreetBeat) – Extorre Gold Mines Limited (AMEX:XG) is pleased to announce today that it has entered into a definitive agreement (the "Agreement") with Yamana Gold Inc. pursuant to which Yamana will acquire all of the issued and outstanding common shares of Extorre ("Extorre Shares") by way of a statutory plan of arrangement (the "Arrangement") under the Canada Business Corporations Act.
Under the terms of the Agreement, each Extorre shareholder will receive in exchange for each Extorre Share held, $3.50 in cash and 0.0467 of a common share of Yamana ("Yamana Share"). Each holder of an Extorre stock option (an "Option") shall be entitled to receive, upon the exercise of such Options, Yamana Shares based upon a share exchange ratio of 0.2648 of a Yamana Share for each Extorre Share which would have been issuable upon exercise of such Options prior to the effective date of the Arrangement.
Based on the closing price of the Yamana Shares on the Toronto Stock Exchange ("TSX") of $16.36 on June 15, 2012, the last trading day before announcement of the Arrangement, the implied transaction price of $4.26 per Extorre Share represents a premium of approximately 54% over the 20-day volume weighted average price of the Extorre Shares on the TSX for the period ending June 15, 2012. The transaction value on a basic shares outstanding basis is approximately $414 million.
Completion of the Arrangement is subject to certain customary conditions, including receipt of all necessary court, shareholder and regulatory approvals. The Agreement also provides for, among other things, customary non-solicitation covenants, a "right to match" in favour of Yamana in the event of a superior proposal and the payment by Extorre to Yamana of a $15 million termination fee should the Arrangement Agreement be terminated in certain circumstances.
The special meeting for Extorre shareholders to approve the Arrangement is expected to occur on or about August 15, 2012. The Arrangement must be approved by 66 2/3% of the Extorre Shares voted at the meeting.
Yale Simpson, Co-Chairman of Extorre commented on the Arrangement as follows:
"We are pleased to be entering into this transaction with Yamana. Extorre's share price has suffered dramatically over the past few months due to a number of factors including: global political and economic uncertainty impacting credit markets; a broad sell-off of all junior non-producing gold companies; concerns with respect to share dilution arising from a decision to develop the Cerro Moro project; and a series of events that have raised the perceived investment risk in Argentina.
Management and the board of directors of Extorre diligently examined all of the available options to finance the Cerro Moro project to production, but given current market conditions, whatever financing mix was chosen, the result would be a serious erosion of the project returns. In conclusion, if Extorre were to lock into the current fiscal/operating environment, the value of the Cerro Moro project to shareholders would be significantly diminished. Aside from this, management did not believe shelving a development decision for any length of time would be viable.
The Cerro Moro project fits very well into Yamana's portfolio and Yamana has both the operational experience in Argentina and financial strength to develop the project on a timely basis. Given the full set of circumstances faced by the Company, the board of directors of Extorre was unanimous in concluding that this transaction represents a good outcome for all stakeholders."
The board of directors of Extorre, based on the recommendation of its special committee, unanimously determined the Arrangement to be in the best interests of the Company and recommends that the Extorre shareholders vote in favour of the Arrangement.
Voting and Support Agreements
Each of the senior officers and directors of Extorre, representing, in aggregate, approximately 7.4% of the issued and outstanding Extorre Shares, has entered into a voting and support agreement with Yamana, pursuant to which, among other things, they have agreed to vote their Extorre Shares in favour of the Arrangement, not to solicit other transactions and to otherwise support the Arrangement.
Extorre's financial advisor for the Arrangement is Canaccord Genuity Corp. and its legal advisor is Gowling Lafleur Henderson LLP. The financial advisor to the special committee of independent directors of Extorre is Gryphon Partners Canada Inc., a wholly owned subsidiary of Standard Chartered Bank, and its legal advisor is Blake, Cassels & Graydon LLP. Each of Canaccord Genuity Corp. and Gryphon Partners Canada Inc. delivered oral opinions that the consideration to be received by the Extorre shareholders is fair from a financial point of view to the Extorre shareholders other than Yamana and its affiliates.
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