In c9742 issued by Dofasco today at 8:30 a.m., Dofasco to Acquire Quebec
Cartier Mining Company, there was an error in the table, 'QCM Selected
Financial Information'. The Income Statement item, Net Income for 2003, was
reported as $(141.5) and should have been $24.5. Corrected copy follows:
Dofasco to acquire Quebec Cartier Mining Company
HAMILTON, ON, June 9 /CNW/ - Dofasco announced today that it has entered
into an agreement to acquire substantially all of the remaining interest that
it does not currently own in Quebec Cartier Mining Company (QCM).
QCM is a leading producer of iron ore products in Quebec, with executive
offices located in Montreal. The company operates an open pit mine,
crusher/concentrator facility, pellet plant, deep-water harbour and a railway
linking the mine to the harbour on Quebec's North Shore region. QCM's total
2004 revenues were $621.4 million on shipments of 13.6 million tonnes, with
net income of $80.9 million. QCM's 2005 production is sold out at prices that
have increased approximately 86% for pellets, and 71% for iron ore
concentrate. Despite the recent strike at QCM, which was settled on June 3,
year-to-date unaudited results to the end of May included revenues of
$347.7 million, with net income of $98.6 million. At the end of May, QCM had
cash on hand of $128.3 million, and bank debt of $41.4 million.
Under the agreement, Dofasco, which currently owns a third of the
preferred shares of QCM, will acquire all of the shares of QCM owned by CAEMI
of Brazil and Investissement Quebec for a total consideration of $306 million
(Canadian). It is planned that immediately following the closing of the
transaction, all of the preferred shares of QCM will be converted into common
shares, which will result in Dofasco holding over 98.7% of the common shares.
The purchase agreement, which is subject to obtaining relevant regulatory
approvals, is expected to close early in the third quarter of this year.
Commenting on the transaction, Don Pether, Dofasco's President and Chief
Executive Officer, observed, "Global iron ore markets have changed
dramatically in the last two years, and with these changes QCM has emerged
with a significantly enhanced ability to generate strong cash flows and
income. This has been due to major structural changes on the supply side of
the market, including global consolidation. In addition, there has been a
major re-balancing of long-term global demand versus supply, in part a result
of the sustained development of the Asian economy."
"Dofasco is currently reviewing its strategic options to unlock the
significant value of its interest in QCM including monetizing a significant
portion of our investment through an offering of QCM securities in public
markets as soon as is practicable," Mr. Pether continued. "Given the rapid
change in global iron ore markets and the pricing outlook, it will be prudent
for Dofasco to hold equity in QCM at a level sufficient to hedge our iron ore
purchases. This will put Dofasco in a strong competitive position given that
there are relatively few iron ore hedging opportunities available for North
American steel producers."
He added, "This acquisition also represents an optimal outcome for the
restructuring of QCM which was begun in 2003 in partnership with
Investissement Quebec and CAEMI. This is a remarkable turnaround that would
not have occurred without this unique partnership and the cooperation of all
parties, including employees, suppliers, customers and particularly, the
participation of Investissement Quebec. We also want to acknowledge the
tremendous working relationship we have enjoyed with CAEMI throughout the
process. QCM emerged from its restructuring in a position to benefit from the
significant improvement in iron ore markets and is now able to generate value
for all of its stakeholders. Given the outlook for robust iron ore pricing,
strong demand and constrained global supply, QCM is expected to remain a major
contributor to the economic life of the province of Quebec as one of North
America's most significant iron ore producers."
QCM recently reached a 6-year agreement with its unions. "The settlement
provides employees with a competitive package that shares the rewards of
improved performance, while positioning the company to provide value to all of
its stakeholders," Mr. Pether commented.
Following closing of the purchase agreement, Dofasco will fully
consolidate QCM's results in its financial statements, pending any future
restructuring that could result from the review of strategic options initiated
by Dofasco. QCM's current management team is expected to remain in place.
A special telephone conference call for investors hosted by Don Pether
and Walter Bilenki, Vice President - Finance, has been scheduled to review
this transaction. The conference call will be held:
- Today (Thursday, June 9) at 11:00 a.m.
- The telephone number for the conference is 1-888-343-2168
- The telephone number to hear the call after it is over (post view) is
(416) 626-4100, enter reservation number 21248927.
- Call participants can also view a slide presentation available to
accompany the conference call at www.dofasco.ca after 8:30 a.m. on
June 9. The slides will be archived after the call on Dofasco's
website.
This special conference call will be webcast live across the Internet
from the Investor page of the Dofasco web site at www.dofasco.ca. The call
will also be archived at that location for 30 days.
<<
QCM Selected Financial Information
-------------------------------------------------------------------------
(in millions except per tonne amounts) 2003(x) 2004 2005(xx)
Year Year YTD May 31
----------------------------
Income Statement
Revenues $ 521.3 $ 621.4 $ 347.7
EBITDA $ 62.5 $ 140.7 $ 155.2
Net income $ 24.5 $ 80.9 $ 98.6
-------------------------------------------------------------------------
Balance Sheet
Cash $ 7.9 $ 41.2 $ 128.3
Debt $ 90.0 $ 39.9 $ 41.4
Non-current liabilities $ 130.0 $ 202.1 $ 190.5
Equity $ 54.9 $ 140.9 $ 239.4
-------------------------------------------------------------------------
Statistical Highlights
Pellet shipments (000s tonnes)(xxx) 8,900 9,200 2,915
Concentrate shipments (000s tonnes) 4,700 4,400 1,410
----------------------------
Total shipments (000s tonnes) 13,600 13,600 4,325
Sales per tonne $ 38 $ 46 $ 80
EBITDA per tonne $ 5 $ 10 $ 36
-------------------------------------------------------------------------
(x) Pre-financial reorganization
(xx) Unaudited
(xxx) 2004 pellet shipments were higher than normal due to an inventory
draw-down and one shutdown versus two normally.
Normalized pellet shipments are approximately 8.8 million tonnes.
Global iron ore prices for 2005 were settled at approximately 71% and 86%
higher for concentrate and pellets respectively.
Pricing 2003 2004 2005
$US/mt Fe unit $US/mt Fe unit $US/mt Fe unit
Concentrate $ 0.318 $ 0.389 $ 0.667
Pellets $ 0.532 $ 0.645 $ 1.201
Since EBITDA is a non-GAAP measure, it does not have any standardized
meaning. Readers are cautioned that EBITDA should not be construed as an
alternative to net income determined in accordance with GAAP as an
indicator of financial performance or to cash flows from operating,
investing and financing activities as measures of liquidity and cash
flows.
Dofasco is a leading North American steel solutions provider. Product
lines include hot rolled, cold rolled, galvanized, Extragal(TM), Galvalume(TM)
and tinplate flat rolled steels, as well as tubular products, laser-welded
blanks and Zyplex(TM), a proprietary laminate. Dofasco's wide range of steel
products is sold to customers in the automotive, construction, energy,
manufacturing, pipe and tube, appliance, packaging and steel distribution
industries.
This News Release contains forward-looking information with respect to
Dofasco's operations and future financial results. Actual results may differ
from expected results for a variety of reasons including the factors discussed
in the Management's Discussion and Analysis section of Dofasco's 2004 Annual
Report and the Quarterly Report to Shareholders for the period ended March 31,
2005. This News Release has been reviewed by the Audit Committee of Dofasco's
Board of Directors.
>>
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