September 08, 2008

Sherritt to reacquire Royal Utilities Income Fund

Sherritt said that it plans to offer CAD 12.25 for each unit through a combination of cash and stock, a premium of 22% over Royal Utilities' Monday closing price of CAD 10.03. The transaction is expected to close in late April.

Sherritt said that “Ontario Teachers' Pension Plan, which owns another approximately 41% of Royal Utilities, has entered into a lock-up agreement with Sherritt in which Teachers' has agreed to tender its units to the deal.”

Sherritt International and the Ontario Teachers' Pension Plan both own 41.2% stakes in the fund. The remaining 17.6% stake is widely held.

Sherritt said the fund is the largest thermal coal producer in Canada. Royal Utilities holds all the common shares of Prairie Mines & Royalty Ltd, a thermal coal producer and has mineral rights in Alberta and Saskatchewan that generate royalties from coal and potash mining.

Mr Jowdat Waheed CEO of Sherritt during a conference call said that "We see a tremendous opportunity of internalizing this cash flow and redirecting it consistent with our model into a growing asset base, driving the top line, driving the EBITDA, driving the earnings profile. In all areas that we look at, we are highly confident we can deliver the returns that our capital base demands from the internalization of this asset."