LSC Lithium Corporation announced that it has entered into an arrangement agreement with Pluspetrol Resources Corporation B.V., pursuant to which Pluspetrol will acquire all of the outstanding common shares of LSC by way of a plan of arrangement.
Under the Arrangement, Pluspetrol would acquire 100% of the issued and outstanding common shares of LSC for cash consideration of C$0.6612 per LSC share. The Transaction was unanimously approved at the meeting of the LSC Board of Directors and the LSC Board of Directors recommends that LSC shareholders vote in favour of the Transaction. The Transaction provides total consideration of approximately C$111 million.
- The Transaction is the result of the previously announced strategic review process conducted by BMO Capital Markets as lead banker and Haitong Securities of Hong Kong, which was focused on Asia.
- The strategic review process, while in place since August 2017, was accelerated upon the release of LSC’s updated Resource Estimate on its Pozuelos Project in November 2018 and its robust Preliminary Economic Assessment on its Pozuelos-Pastos Grandes Project in December 2018, and recently Pluspetrol was granted exclusivity and has completed extensive due diligence.
- The C$0.6612 cash consideration offered for each LSC share represents a 30% premium to LSC’s 30-day volume-weighted average share price on the TSX-V for the period ending January 14, 2019.
- The consideration is all cash and is not subject to a financing condition.
- The consideration secures immediate value for LSC shareholders, eliminating technical and financing risks involved in advancing LSC’s development projects.
- Shareholders who collectively own approximately 52% of LSC’s outstanding shares have entered into support agreements pursuant to which they have agreed to vote their shares in favour of the Transaction.
- LSC is entitled to terminate the Arrangement Agreement in order to enter into a definitive agreement with respect to a superior proposal, in which case Pluspetrol is entitled to a termination fee of C$4,486,000.
- Shareholders subject to the support agreements are released from the support agreements in the event LSC terminates the Arrangement Agreement to enter into a definitive agreement with respect to a superior proposal and such superior proposal provides for consideration of C$0.80 or higher.
- LSC, under the terms of the Arrangement, is not entitled to solicit third parties or provide access to data under NDA’s or otherwise.
Stephen Dattels, Chairman of the Board of LSC, commented, “LSC has been able to produce a large lithium carbonate resource at its Pozuelos-Pastos Grandes Project as well as a robust PEA. It also has an extensive portfolio of high quality lithium exploration assets, most notably at Rio Grande and Salinas Grandes. However, since February of 2018, capital markets have been difficult for junior lithium explorers in Argentina and elsewhere, resulting in a correction in market valuations across the board. Notwithstanding this market correction, and due to our progress in advancing our top-tier assets, we have achieved an opportunity for shareholders to realise a liquidity event at normal market premiums. LSC’s team of technical and corporate professionals led by Ian Stalker are deserving of substantial credit for delivering this result and in recognition thereof, Ian Stalker has been granted a share award by LSC’s Board of Directors of one million shares.”
About LSC Lithium Corporation
LSC Lithium has amassed a large portfolio of prospective lithium rich salars and is focused on developing its material projects: Pozuelos and Pastos Grandes Project, Rio Grande Project and Salinas Grandes Project. All LSC tenements are located in the “Lithium Triangle,” an area at the intersection of Argentina, Bolivia, and Chile where the world’s most abundant lithium brine deposits are found. LSC Lithium has a land package portfolio totaling approximately 300,000 hectares, which represents extensive lithium prospective salar holdings in Argentina.
Pluspetrol is the leading oil and gas private company in Latin America, with presence in 3 continents and operations in 5 countries: Argentina, Angola, Bolivia, Colombia and Perú. Pluspetrol is also positioned as an important protagonist in unconventional reservoirs in Argentina, which makes it a key global player in this strategic resource.