3-way deal creates canadian coal giant

This is relevant to BHP.
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3-Way Deal Creates Canadian Coal Giant

01/13/2003 18:16:49 EST
A takeover battle for Fording Inc. ended Monday with announcement of a three-way combination of assets to create a Canadian metallurgical coal giant producing 20 percent of the world's supply.

Fording unveiled a Canadian $1.7-billion ($1.1 billion) deal with former rival Sherritt International and Teck Cominco Ltd. that will bring the companies' coal mines in southeastern British Columbia into an income trust and coal partnership.

"It is the most significant reshaping and rationalization ... of the Canadian metallurgical coal industry that any of us know of," Fording president Jim Gardiner told analysts.

The new Fording Canadian Coal Trust is expected to sell 25 million tons of coal this year, nearly 80 percent more than Fording on its own.

It will be the world's second largest producer of metallurgical coal, the fuel used in steel production, behind Australia's BHP Billiton.

The deal will also see Calgary-based Fording become solely a metallurgical coal producer, selling its Alberta thermal coal properties, the fuel used in coal-fired power plants, to Sherritt Coal for C$225 million ($149 million).

Under the transaction, existing Fording shareholders will control nearly 40 percent of the new Fording trust, with Sherritt Coal owning nearly 23 percent.