Baffinland Iron Mines Corporation to C$1.40 per Common Share

bwire




TORONTO & LUXEMBOURG (Business Wire) -- Regulatory News:




ArcelorMittal today announced that it has increased its offer (the
"Offer") for all outstanding common shares ("Common Shares") of
Baffinland Iron Mines Corporation ("Baffinland") and all outstanding
common share purchase warrants issued pursuant to a warrant indenture
dated 31 January 2007 (the "2007 Warrants") to C$1.40 per Common Share.




The increased all cash offer represents a premium of approximately 27%
to ArcelorMittal's original Offer price of C$1.10 per Common Share, and
a premium of 150% to the trading price of the Common Shares prior to
Nunavut's original unsolicited offer in September 2010.




Peter Kukielski, Head of Mining and Member of the Group Management Board
of ArcelorMittal said: "ArcelorMittal's increased Offer of C$1.40 per
share for all Common Shares provides demonstrably superior value and
certainty for Baffinland shareholders, compared to Nunavut Iron Ore
Acquisition Inc.'s revised coercive partial offer. Our Offer ensures
shareholders receive 100% cash for all of their shares, rather than cash
for just some shares and diluted value for the shares not taken up under
the Nunavut offer."




If Nunavut Iron Ore Acquisition Inc.'s ("Nunavut") revised offer were
successful, Baffinland shareholders would face the prospect of being
left with thinly traded minority Common Shares that would be unlikely to
reflect the full value of Baffinland's assets. Furthermore, if Nunavut's
partial offer was successful and Baffinland were to issue the
approximately 157.4 million warrants contemplated in their partial
offer, a substantial overhang would exist, which would lead to
significant equity dilution, both of which would likely have a negative
impact on the trading value of the remaining minority held Common Shares
of Baffinland.




Since Nunavut already owns approximately 10.5% of the Common Shares, it
is effectively bidding for only approximately 49.5%, or approximately
55.4% of the 89.5% of Common Shares it does not currently own.




In order for the value of Nunavut's revised coercive partial offer to
equal the C$1.40 per Common Share offered by ArcelorMittal's increased
Offer (assuming a 55.4% pro rata take-up under Nunavut's offer), the
remaining minority held Common Shares would need to trade at C$1.18 per
share (which assumes a warrant value of C$0.23 per full warrant using
Nunavut's volatility and risk free rate assumptions as set out in its
December 29 announcement), which is more than double the C$0.56 trading
value of the Common Shares prior to Nunavut's original offer for all of
the Common Shares in September 2010. Assuming Common Shares tendered to
the Offer under lock-up agreements with ArcelorMittal do not tender and
there is a 76.6% take-up under the Nunavut revised coercive partial
offer, the remaining minority held Common Shares would need to trade at
C$1.06 per share for the value of Nunavut's revised coercive partial
offer to equal the C$1.40 per Common Share offered by ArcelorMittal's
increased Offer.




Nunavut's revised coercive partial offer leaves Baffinland shareholders
uncertain about:



how many of their shares will be taken-up due to the pro rationing of
tendered shares;


the price at which shares not taken up by Nunavut would trade should
the current partial offer by Nunavut be completed;


the timing of any amendment to its offer to provide for exchange
rights;


whether warrants would be issued in the future and the value such
warrants represent; and


Nunavut's project development plan for Baffinland.





As previously announced, ArcelorMittal has entered into a lock-up
agreement with Baffinland's largest shareholder, Resource Capital Funds
("RCF"), pursuant to which RCF has tendered all of its Common Shares and
2007 Warrants, representing approximately 22.5% of the outstanding
Common Shares (on a fully diluted basis), to the Offer. In addition,
each of the directors and officers of Baffinland have tendered all
Common Shares and 2007 Warrants held by them, representing a further
approximately 2.4% of the outstanding Common Shares (on a fully diluted
basis), to the Offer pursuant to lock-up agreements with ArcelorMittal.
In addition, as at 29 December 2010, no further conditions relating to
regulatory approvals are outstanding under the Offer.




The ArcelorMittal Offer remains subject to the same conditions as the
original Offer of 12 November 2010 as amended by the Notice of Variation
and Extension dated 18 December 2010.




The Support Agreement entered into between ArcelorMittal and Baffinland
on November 8, 2010 as amended December 18, 2010, including the
non-solicitation covenants and ArcelorMittal's right to match any
unsolicited superior proposal, remains in place.




ArcelorMittal has today mailed a notice of variation of the Offer with
respect to its increased Offer price of C$1.40 per Common Share for all
Common Shares to Baffinland securityholders. The Offer price of C$0.10
per 2007 Warrant remains unchanged. The revised Offer is open for
acceptance until 11:59 p.m. (Toronto time) on 10 January 2011, unless
further extended or withdrawn.




ArcelorMittal has retained Georgeson Shareholder Communications Canada
Inc. as information agent in connection with the Offer. Computershare
Investor Services Inc. is the depositary for the Offer. Any questions or
requests for assistance or further information on how to tender Common
Shares or 2007 Warrants to the Offer may be directed to, and copies of
the above referenced documents may be obtained by contacting, the
information agent at 1-888-605-7641 or by email at [email protected]
or by contacting the depositary at 1-800-564-6253 (North America) or
1-514-982-7555 (overseas), or by email at [email protected].
Securityholders whose Common Shares or 2007 Warrants are registered in
the name of a broker, investment dealer, bank, trust company or other
nominee should contact such nominee for assistance in depositing their
Common Shares and 2007 Warrants to the Offer.




Contact Information




Information Agent for the OfferGeorgesonToll Free (North
America): 1-888-605-7641Collect (Overseas): 1-781-575-2168E-Mail:
[email protected]