Exhibit 99.1
FORM 51-102F3
MATERIAL CHANGE REPORT
1. NAME AND ADDRESS OF CORPORATION
Falconbridge Limited (the "Corporation")
Ste. 200 - 181 Bay Street,
P.O. Box 755, BCE Place
Toronto, ON M5J 2T3
2. DATE OF MATERIAL CHANGE
September 22, 2005
3. NEWS RELEASE
On September 22, 2005, the Corporation issued a news release
though the newswire services of CCN Matthews. A copy of the press
release is attached as Schedule "A".
4. SUMMARY OF MATERIAL CHANGE
On September 22, 2005, the Board of Directors of the Corporation
announced that the Corporation had adopted a shareholder rights
plan agreement dated as of September 22, 2005 between the
Corporation and CIBC Mellon Trust Company (the "Rights Plan") to
ensure, to the extent possible, that all shareholders of the
Corporation ("Shareholders") are treated fairly in connection
with any take-over bid for the Corporation.
5. FULL DESCRIPTION OF MATERIAL CHANGE
On September 22, 2005, the Board of Directors of the Corporation
approved the Rights Plan. The Rights Plan will provide the Board
of Directors of the Corporation and the Shareholders more time to
fully consider any unsolicited take-over bid for the Corporation.
It will also allow more time for the Board of Directors to
pursue, if appropriate, other alternatives to maximize
Shareholder value. The Rights Plan became effective on September
22, 2005, subject to registering the rights under the U.S.
Securities Exchange Act of 1934 which has occurred. Independent
Shareholders must vote on a resolution to confirm the adoption of
the Rights Plan within six months of the date of the
implementation of the Rights Plan. If the resolution is not
approved by a majority of votes cast by Shareholders, the Rights
Plan and the rights issued under the Rights Plan ("Rights") will
terminate and cease to be effective.
SUMMARY OF THE RIGHTS PLAN
--------------------------
The following is a summary of the principal terms of the Rights
Plan, which summary is qualified by and is subject to the full
terms and conditions of the Rights Plan. A signed copy of the
Rights Plan is available from the Secretary of the Corporation
upon written request or at www.sedar.com. Except as otherwise
defined herein, capitalized terms used herein have the meanings
ascribed thereto in the Rights Plan.
ISSUE OF RIGHTS
---------------
Effective as of the close of business on September 22, 2005, one
right (a "Right") was issued and is attached to each outstanding
Common Share of the Corporation. One Right will also be issued and
attach to each Common Share of the Corporation (and any other
share in the capital stock or voting interests of the Corporation
entitled to vote generally in the election of directors other than
directors to be elected by the Corporation's Junior Preference
Shares) (collectively, "Voting Shares") issued thereafter, subject
to the limitations set forth in the Rights Plan.
ACQUIRING PERSON
----------------
An Acquiring Person is a person that Beneficially Owns 20% or more
of the outstanding Voting Shares. An Acquiring Person does not,
however, include the Corporation or any Subsidiary of the
Corporation, or any person that becomes the Beneficial Owner of
20% or more of the Voting Shares as a result of certain exempt
transactions. These exempt transactions include where any person
becomes the Beneficial Owner of 20% or more of the Voting Shares
as a result of, among other things: (i) specified acquisitions of
securities of the Corporation, (ii) acquisitions pursuant to a
Permitted Bid or Competing Permitted Bid (as described below),
(iii) specified distributions of securities of the Corporation,
(iv) certain other specified exempt acquisitions including for
portfolio managers, mutual funds and other similar entities with
no present intention to take control of the Corporation, and (v)
transactions to which the application of the Rights Plan has been
waived by the Board. An Acquiring Person also does not include any
Person that owned 20% or more of the outstanding Voting Shares at
the Effective Time unless that person increases its percentage
interest in the voting shares other than pursuant to one of the
previously mentioned transactions.
RIGHTS EXERCISE PRIVILEGE
-------------------------
The Rights will separate from the Voting Shares to which they are
attached and will become exercisable at the close of business (the
"Separation Time") on the tenth business day after the earliest
of: (a) the first date of public announcement that a person and/or
others associated, affiliated or otherwise connected to such
person, or acting in concert with such person, have become an
Acquiring Person; (b) the date of commencement of, or first public
announcement of the intent of any person to commence, a take-over
bid, other than a Permitted Bid or a Competing Permitted Bid; and
(c) the date upon which a Permitted Bid or a Competing Permitted
Bid ceases to be such, or such later date as the Board of
Directors may determine in good faith. Subject to adjustment as
provided in the Rights Plan, each Right will entitle the holder to
purchase one Common Share for an exercise price (the "Exercise
Price") equal to four times the prevailing market price of a
Common Share as at the Separation Time.
A transaction in which a person becomes an Acquiring Person is
referred to as a "Flip-in Event". Any Rights held by an Acquiring
Person on or after the earlier of the Separation Time or the first
date of public announcement by the Corporation or an Acquiring
Person that an Acquiring Person has become such, will become void
upon the occurrence of a Flip-in Event.
After the close of business on the tenth business day after the
first public announcement of the occurrence of a Flip-in Event,
the Rights (other than those held by the Acquiring Person) will
entitle the holder to purchase, for the Exercise Price, that
number of Voting Shares having an aggregate market price (based on
the prevailing market price at the time of the consummation or
occurrence of the Flip-in Event) equal to twice the Exercise
Price.
IMPACT ONCE RIGHTS PLAN IS TRIGGERED
------------------------------------
Upon a Flip-in Event occurring and the Rights separating from the
attached Voting Shares, reported earnings per Voting Share on a
fully diluted or nondiluted basis may be affected. Holders of
Rights who do not exercise their Rights upon the occurrence of a
Flip-in Event may suffer substantial dilution.
By permitting holders of Rights other than an Acquiring Person to
acquire Voting Shares of the Corporation at a discount to market
value, the Rights may cause substantial dilution to a person or
group that acquires 20% or more of the voting securities of the
Corporation other than by way of a Permitted Bid or other than in
circumstances where the Rights are redeemed or the Board of
Directors waives the application of the Rights Plan.
CERTIFICATES AND TRANSFERABILITY
--------------------------------
Prior to the Separation Time, certificates for Voting Shares will
also evidence one Right for each Voting Share represented by the
certificate. Certificates issued after September 22, 2005 will bear
a legend to this effect. Rights are also attached to Voting Shares
outstanding at the close of business on September 22, 2005,
although share certificates issued as at that date will not bear
such a legend.
Prior to the Separation Time, Rights will not be transferable
separately from the attached Voting Shares. From and after the
Separation Time, the Rights will be evidenced by Rights
certificates which will be transferable and traded separately from
the Voting Shares.
PERMITTED BIDS AND COMPETING PERMITTED BIDS
-------------------------------------------
The Rights Plan is not triggered if an offer would allow
sufficient time for the Shareholders to consider and react to the
offer and would allow Shareholders to decide to tender or not
tender without the concern that they will be left with illiquid
Voting Shares should they not tender.
A "Permitted Bid" is a take-over bid where the bid is made by way
of a take-over bid circular and: (i) is made to all holders of
Voting Shares, other than the offeror, for all of the Voting
Shares held by those holders; (ii) the bid is irrevocably open for
acceptance for at least 60 days and provides that both deposit and
withdrawal rights extend throughout the bid period; (iii) the bid
must not permit Voting Shares tendered pursuant to the bid to be
taken up unless at such time more than 50% of the Voting Shares
held by Shareholders other than the bidder, its affiliates and
Persons acting jointly or in concert with the bidder (the
"Independent Shareholders") have been tendered pursuant to the
take-over bid and not withdrawn; and (iv) the bid provides that if
the condition in (iii) is met, that fact will be publicly
announced and the bid will be extended for at least 10 Business
Days following such announcement.
A "Competing Permitted Bid" is a take-over bid made after a
Permitted Bid has been made and prior to the expiry of the
Permitted Bid and that satisfied all the criteria of a Permitted
Bid except that since it is made after a Permitted Bid has been
made, the minimum deposit period and the time period for the
take-up of and payment for shares tendered under a Competing
Permitted Bid is not 60 days, but is instead the later of (i) the
last day on which a take-over bid must be open for acceptance
after the date of such bid under applicable securities
legislation, and (ii) the earliest date for take-up and payment of
shares under any other Permitted Bid then in existence.
Neither a Permitted Bid nor a Competing Permitted Bid is required
to be approved by the Board and such bids may be made directly to
Shareholders. Acquisitions of Voting Shares made pursuant to a
Permitted Bid or a Competing Permitted Bid do not give rise to a
Flip-in Event.
WAIVER AND REDEMPTION
---------------------
The Board of Directors may, at any time prior to the occurrence of
a Flip-in Event that would occur by reason of an acquisition of
Voting Shares otherwise than pursuant to a take-over bid made by
means of a take-over bid circular to all holders of record of
Voting Shares (or otherwise as outlined in the paragraph below),
waive the application of the Rights Plan to such Flip-in Event.
The Board may also, prior to the occurrence of a Flip-In Event,
waive the application of the Rights Plan to a particular Flip-In
Event which would occur as a result of a take-over bid made under
a circular prepared in accordance with applicable securities laws
to all holders of Voting Shares. In such event, the Board shall be
deemed to also have waived the application of the Rights Plan to
any other Flip-In Event occurring as a result of any other
takeover bid made under a circular prepared in accordance with
applicable securities laws to all holders of Voting Shares prior
to the expiry of any take-over bid for which the Rights Plan has
been waived or deemed to have been waived.
The Board may also waive the application of the Rights Plan to an
inadvertent Flip-in Event, on the condition that such person
reduces its beneficial ownership of Voting Shares such that it is
not an Acquiring Person within 14 days of the determination of the
Board (or any earlier or later time specified by the Board).
Until the occurrence of a Flip-in Event, the Board of Directors
may, at any time prior to the Separation Time, elect to redeem all
but not less than all of the then outstanding Rights at $0.0000l
per Right. In the event that a person acquires Voting Shares
pursuant to a Permitted Bid, a Competing Permitted Bid or pursuant
to a transaction for which the Board of Directors has waived the
application of the Rights Plan, then the Board shall, immediately
upon the consummation of such acquisition, without further
formality, be deemed to have elected to redeem the Rights at the
redemption price.
SUPPLEMENT AND AMENDMENTS
-------------------------
Prior to the confirmation of the Rights Plan by Shareholders, the
Corporation may, without the approval of holders of Voting Shares
or Rights, amend, supplement or restate the Rights Plan in order
to make any changes which the Board of Directors acting in good
faith may deem necessary or desirable.
Following Shareholder confirmation of the Rights Plan, the
Corporation may, without the approval of the holders of Voting
Shares or Rights, make amendments to (i) correct clerical or
typographical errors, (ii) to maintain the validity and
effectiveness of the Rights Plan as a result of any change in
applicable law, rule or regulatory requirement, and (iii) as
otherwise specifically contemplated therein. Any amendment
referred to in (iii) must, if made before the Separation Time, be
submitted for approval to the holders of Voting Shares at the next
meeting of Shareholders and, if made after the Separation Time,
must be submitted to the holders of Rights for approval.
At any time before the Separation Date, the Corporation may with
prior written consent of the Independent Shareholders received at
the special meeting called and held for such purpose, amend, vary
or rescind any of the provisions of the Rights Plan or the Rights,
whether or not such action would materially adversely affect the
interests of the Rights generally.
CONFIRMATION
------------
The Rights Plan must be reconfirmed by a resolution passed by a
majority of the votes cast by all Shareholders who vote in
respect of such reconfirmation at every third annual meeting
following the meeting at which the Rights Plan is initially
confirmed.
The Rights Plan must be approved by a majority of the votes cast
by the holders of the Voting Shares present or represented by
proxy at the meeting. If the Rights Plan is not approved, the
Rights Plan and all outstanding Rights will terminate and be void
and of no further force and effect.
6. RELIANCE ON SUBSECTION 7.1(2) OR (3) OF NATIONAL INSTRUMENT 51-102
Not Applicable.
7. OMITTED INFORMATION
Not Applicable.
8. EXECUTIVE OFFICER
Stephen Young
Ste. 200-181 Bay Street
BCE Place
Toronto, ON M5J 2T3
Fax: (416) 982-7490
9. DATE OF REPORT
September 27, 2005
[FALCONBRIDGE LOGO]
Schedule "A"
FALCONBRIDGE ADOPTS SHAREHOLDER RIGHTS PLAN
Plan Will Prevent Progressive Acquisition of
Control, Force Offer to All Shareholders
TORONTO, ONTARIO--SEPTEMBER 22, 2005 - Falconbridge Limited (TSX: FAL.LV;
NYSE: FAL) announced today that the Board of Directors of the Company has
adopted a shareholder rights plan, effective immediately, designed to
enhance the Company's ability to obtain the best value for all shareholders
and prevent a bidder from acquiring control of Falconbridge in a manner
detrimental to shareholders.
The rights plan will prevent an attempt to acquire control of the Company
other than by means of an offer made to all shareholders. "Some of our
shareholders have voiced concerns with the possibility of a creeping
takeover," said Falconbridge's Chief Executive Officer, Mr. Derek Pannell.
"The plan will give the Board of Directors an effective tool in responding
to an attempt to acquire control through a progressive increase in
ownership without an offer to all shareholders. If the actions of a bidder
resulted in the acquisition of Falconbridge, we would want to make sure
shareholders are treated fairly."
The rights issued under the rights plan become exercisable when a person,
together with any parties related to it, acquires or announces its
intention to acquire 20% or more of the Corporation's outstanding common
shares without complying with the "Permitted Bid" provisions of the rights
plan or without approval of the Board of Directors of the Corporation.
Should such an acquisition occur, rights holders (other than the acquiring
person and related persons) can purchase common shares of the Corporation
at half the prevailing market price at the time the rights become
exercisable. Each right, upon exercise, would permit the purchase of shares
of the Corporation at a substantial discount to the market price, as
defined in the Rights Plan. As a result of the current ownership of Xstrata
plc of more than 20% of the voting shares, Xstrata will be grandfathered
under the plan, but cannot increase percentage ownership of the Voting
Shares of the Corporation other than in certain specified circumstances.
Under the rights plan, a Permitted Bid is a bid made to all holders of the
Corporation's common shares for all of their shares that is open for
acceptance for not less than 60 days. If at the end of 60 days at least 50%
of the outstanding shares, other than those owned by the offeror and
certain related parties have been tendered, the offeror may take up and pay
for the shares but must extend the bid for a further 10 days to allow other
shareholders to tender.
The rights plan must be confirmed by shareholders within 6 months.
ADVISORY SUPPORT
To facilitate the evaluation and review of all value creation
opportunities, the Company has retained the services of CIBC World Markets
as financial advisors and McCarthy Tetrault as legal advisors.
Falconbridge Limited is a leading copper and nickel company with
investments in fully-integrated zinc and aluminum assets. Its primary focus
is the identification and development of world-class copper and nickel
mining deposits. It employs 14,500 people at its operations and offices in
18 countries. Falconbridge's common shares are listed on the New York Stock
Exchange (FAL) and the Toronto Stock Exchange (FAL.LV). Falconbridge's
website can be found at www.falconbridge.com.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Denis Couture
Senior Vice-President, Investor Relations, Communications and Public Affairs
Falconbridge Limited
(416) 982-7020
denis.couture@falconbridge.com
Frank DeLuca
McCarthy Tetrault LLP
Box 48 Suite 4700, TD Bank Tower
Toronto, Ontario Canada M5K 1E6
T:416.601.8374
F:416.868.0673