At closing, existing Pan American and Tahoe shareholders will own approximately 73% and 27% of Pan American, respectively. Upon satisfaction of the payment conditions under the terms of the CVR, Pan American and Tahoe shareholders will own approximately 68% and 32%, respectively, of the combined company (based upon the number of Pan American shares outstanding following completion of the Transaction).
Each of Tahoe’s directors and senior officers, who together hold or exercise control or direction over approximately 5.3 million common shares of Tahoe, representing approximately 1.7% of Tahoe’s issued and outstanding common shares, have entered into support agreements with Pan American, agreeing to vote their Tahoe shares in favour of the Transaction.
Each of the directors and senior officers of Pan American, holding approximately 3.3 million of Pan American’s common shares, representing approximately 2.2% of Pan American’s issued and outstanding common shares have entered into agreements with Tahoe, agreeing to vote their Pan American shares in favour of the Transaction.
Pan American has sufficient cash on hand and available under existing credit arrangements to finance the cash portion of the consideration for the Transaction.
Board of Directors’ Recommendations
The Board of Directors of Pan American has unanimously approved the Transaction. The Board of Directors of Tahoe, on the unanimous recommendation of a Committee of Independent Directors of Tahoe, has unanimously approved the Transaction. The Board of Directors of each of Pan American and Tahoe unanimously recommend that Pan American and Tahoe shareholders vote in favor of the Transaction.
BMO Capital Markets and Trinity Advisors Corporation have each provided a fairness opinion to the Independent Committee of the Board of Directors of Tahoe. CIBC World Markets Inc. and TD Securities have each provided a fairness opinion to Pan American’s Board of Directors.
Transaction Conditions and Timing
The Transaction will be implemented by way of a court-approved plan of arrangement under theBusiness Corporations Act(British Columbia) and will require the approval of: (i) 66 2/3% of the votes cast by the holders of Tahoe’s common shares present in person or represented by proxy, and (ii) a simple majority of the votes cast by the holders of Tahoe’s common shares after excluding any votes of “related parties” and “interested parties” and other persons required to be excluded under Canadian Multilateral Instrument61-101Protection of Minority Security Holders in Special Transactions, all at a special meeting to consider the Transaction.
The completion of the Transaction will also require approval of a simple majority of Pan American shareholders present in person or represented by proxy at a special meeting of Pan American shareholders in respect of the share issuance in connection with the Transaction and approval from 66 2/3% of Pan American’s shareholders present in person or represented by proxy at a special meeting of Pan American shareholders to an increase in Pan American’s authorized share capital.
The completion of the Transaction will also be subject to regulatory approvals and closing conditions customary in transactions of this nature. The Arrangement Agreement provides for customary deal-protection provisions, including mutualnon-solicitation covenants and rights to match superior proposals. The Arrangement Agreement includes a reciprocal termination fee of US$38 million, payable by Tahoe to Pan American, or Pan American to Tahoe, as the case may be, under certain circumstances.
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