Brookfield unit to sell North American Palladium in $1-billion deal – by Niall McGee and David Milstead (Globe and Mail – October 8, 2019)

Canadian palladium miner North American Palladium Ltd. agreed to a $1-billion takeover in an unusual deal that sees its biggest shareholder, Brookfield Business Partners LP, accept a discount in order to get the transaction done.

Toronto-based North American Palladium said Monday that it had reached a friendly agreement with South Africa’s Impala Platinum Holdings Ltd. Public shareholders of North American Palladium will get $19.74 a share, exactly the level the shares closed at on Friday. Brookfield Business Partners and the institutions that invested alongside it, however, will receive only $16 a share for the 81-per-cent stake they hold – a 19-per-cent discount.

Brookfield appears eager to lock in its gains from a turnaround at the mining company and strong prices for the metal, which is used in vehicles to minimize toxic emissions. Takeover talks with Impala intensified in July and shares in North American Palladium ran up by 35 per cent over the next few months.

Brookfield first got involved as a debt holder in 2013, advancing US$130-million to North American Palladium at a 15-per-cent interest rate. The company needed the funds to expand its Lac des Iles palladium mine, northwest of Thunder Bay.

But over the next few years, the company ran into operational problems and soon was facing a cash crunch amid crumbling palladium prices. In 2015, the company went through a recapitalization that saw Brookfield convert its debt to equity and in the process become the biggest shareholder with 92 per cent of the stock.

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