MONTREAL, QUEBEC, Oct. 27, 2009 (Marketwire) -- The Board of Directors of Freewest Resources Canada Inc. (TSX VENTURE:FWR) today unanimously recommended that Freewest shareholders reject the hostile take-over bid by Noront Resources Ltd. and not tender their shares to the Noront offer. The Board's recommendation is contained in a Directors' Circular being filed today.
The Directors' Circular contains the Board's recommendation, a detailed discussion of its reasons for recommending that shareholders reject the Noront offer, as well as other information required under applicable Canadian law. Freewest shareholders are urged to read the Directors' Circular in its entirety.
In making its recommendation, the Board considered many factors, including the recommendation of a Special Committee comprised of Freewest's independent directors and a written opinion from Freewest's financial advisor - CIBC World Markets Inc. - which states that, as of the date of such opinion, the consideration offered under the Noront offer is inadequate, from a financial point of view, to Freewest shareholders. The full text of the CIBC World Markets opinion is included in the Directors' Circular.
"We believe that Noront's offer is financially inadequate, opportunistic, and fails to recognize the strategic value of Freewest's assets and our future value-creation potential," said Mackenzie I. Watson, President, Chief Executive Officer and a director of Freewest. "The Board fails to see how the Noront offer serves the interests of Freewest shareholders."
Reasons for the Recommendation
The Freewest Board of Directors believes that the Noront offer fails to provide full value for Freewest's assets and shares and is an attempt by Noront to acquire Freewest without offering adequate consideration to Freewest shareholders. The Board of Directors cited a number of reasons for its recommendation, including that:
- The Board believes that the Noront offer fails to adequately compensate Freewest shareholders for the strategic value of Freewest's assets.
- The Board believes that the timing of the Noront offer is opportunistic and disadvantageous to Freewest shareholders.
- Noront does not have a strategy focused on chromite.
- The Board believes that the Noront offer does not reflect an adequate premium for control of Freewest.
- The consideration offered under the Noront offer represents a discount to the current trading price of Freewest's shares.
- The value of the consideration offered under the Noront offer is uncertain and entirely dependent on the value of Noront's shares, which are subject to significant fluctuations.
- It may be difficult for Freewest shareholders to dispose of Noront shares.
- Superior proposals or other alternatives may emerge.
- CIBC World Markets has provided a written opinion that, as of the date of such opinion, the consideration offered under the Noront offer is inadequate, from a financial point of view, to Freewest shareholders.
- The Noront offer is highly conditional.
- The Noront offer is not a "Permitted Bid" under Freewest's Shareholder Rights Plan adopted in March 2008.
- Freewest has a track record of creating value for Freewest shareholders.
"It's easy to see why Noront needs Freewest, but it's difficult to understand why Freewest would want Noront," continued Mr. Watson, Freewest's President and Chief Executive Officer. "We are focused on the development of our McFaulds chromite property. In contrast, Noront does not appear to have a development strategy focused on its chromite property. Given that Freewest shareholders would own approximately 27% of the combined entity, our Board sees little sense in diluting the growth and value inherent in Freewest shares and our McFaulds chromite property when the main beneficiaries would be the current Noront shareholders."
As discussed in the Directors' Circular, the Freewest Board of Directors and Special Committee, together with Freewest's management and financial and legal advisors, have been working to evaluate a range of strategic alternatives to enhance Freewest shareholder value. Discussions are underway with third parties in order to bring forward additional value-maximizing alternatives. While it is difficult to predict with certainty whether any transactions will emerge from these efforts and discussions, the Board of Directors believes that Freewest and its assets are potentially very attractive to other parties in addition to Noront.
In the Directors' Circular, the Board cautions Freewest shareholders against tendering to the Noront offer before the Board and its advisors have had an opportunity to fully explore all available alternatives to the Noront offer, including the status quo.
Mr. Watson added, "We are committed to enhancing value for our shareholders and will aim to do so through the continued execution of our strategy and the active consideration of potential alternatives."
Availability of the Directors' Circular
Shareholders are urged to read the Directors' Circular in its entirety. The document will be available free of charge on SEDAR at www.sedar.com and on Freewest's website at www.freewest.com. Copies of the Directors' Circular are being mailed to all Freewest shareholders.
For Investor Questions, Including How to Withdraw Shares from the Noront Offer
Shareholders who have questions or who may have already tendered their shares to the Noront offer and wish to withdraw them, may do so by contacting Freewest, toll free at 1-888-878-3551, or by e-mail at firstname.lastname@example.org.
Freewest is a well-financed mineral exploration company. It is actively exploring for gold, base-metals and chromite within eastern Canada. Corporate information can be accessed on the Internet at www.freewest.com. Freewest's shares are listed on Tier 1 of the TSX Venture Exchange under the symbol FWR.
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.