By Sheri Kasprzak
New York, June 26 - Inco Ltd. secured a commitment for $3 billion from a private placement of subordinated convertible notes with Phelps Dodge Corp.
The notes bear interest on a paid-in-kind basis at 8% annually. The notes are convertible six months after issuance at 95% of the market value at the time of conversion.
Inco will be able to redeem the notes for cash at any time after the closing of its proposed merger with Falconbridge Ltd.
The notes will only be funded if Inco completes its proposed acquisition of Falconbridge and are intended to provide Inco with extra liquidity when it buys the Falconbridge common shares or to satisfy related dissent rights.
Phelps Dodge is proposing to acquire the combined Inco and Falconbridge at a value of $40 billion.
Inco is a Toronto primary metals company while Falconbridge is a Toronto-based cooper and nickel mining company. Phelps Dodge is a Phoenix-based copper and molybdenum miner.
| Issuer: | Inco Ltd.
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| Issue: | Subordinated convertible notes
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| Amount: | $3 billion
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| PIK: | 8%
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| Conversion price: | 95% of market value at time of conversion
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| Warrants: | No
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| Investor: | Phelps Dodge Corp.
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| Announcement date: | June 26
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| Stock symbol: | NYSE: N
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| Stock price: | $64.21 at close June 26
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