Bidder's Statement - Peabody Energy

Group member will be entitled to purchase the same volume of
products on terms no less favourable to the ArcelorMittal Group
member when compared to the terms offered to Macarthur
Group’s other long-term contract customers of comparable term
and annual and total volumes. Appropriate adjustments may need
to be made for, among other things, differences in coal quality
and how freight costs are borne. These arrangements are always
subject to the matters referred to in section 8.3(b).
(j) Marketing and logistics: the Shareholders’ Deed sets out a
number of principles in relation to marketing Macarthur products.
Implementation of these principles is subject to legal restrictions,
including the Corporations Act, any applicable law and while
Macarthur remains listed, the Listing Rules. This may result
in disinterested Macarthur Shareholders needing to approve
implementation of the arrangements. Key principles include:
• new transactions between Macarthur and Peabody Group
members and Macarthur and ArcelorMittal Group members
involving more than 200,000 tonnes (either individually or
cumulatively by multiple identical transactions to subvert that
threshold) will require express written approval of PAC2 and
AM BV2. Any value created by such transactions will be shared
by Macarthur and PAC2 or AM BV2 on arms’ length terms;
• transactions involving less than 200,000 tonnes between
Macarthur and Peabody Group members or Macarthur and
ArcelorMittal Group members which are on at least arms’ length
terms will not require PEAMCoal Holdings shareholder approval;
• the chief marketing officer will be a PAC2 appointee and
AM BV2 will be able to appoint a person to a senior marketing
role, a person to a marketing researcher role and a person to
a technical marketing role;
• any non-standard sales contracts (i.e. term longer than
3 years or annual tonnage is in excess of 1.5 million tonnes
per year or 20% of expected annual production or contract
pricing is less then 85% of budget and/or approved pricing
levels and methodology) will require approval by PAC2 and
AM BV2 directors on the Macarthur Board;
• logistics contracts (port and rail) for new capacity which are
on non-standard terms (i.e. term is greater than 2 years or
total throughput tonnage exceeds 2 million tonnes per year
or logistics contract would result in total capacity being more
than 10% in excess of what is required to achieve current
approved budgets) will require approval by PAC2 and AM BV2
directors on the Macarthur Board; and
• AM BV2 will lose these rights if it ceases to hold at least 20%
of the shares in PEAMCoal Holdings.
(k) Confidentiality: PAC2 and AM BV2 have agreed confidentiality
protocols to protect against the disclosure of commercially
sensitive information to parts of the PEAMCoal Holdings
Shareholder group which is involved in the business of consuming
coal. The confidentiality protocols contemplate information
barriers being put in place or the redaction of commercially
sensitive information.
10.4 Pre-Bid Acceptance Deed
AM and PEAMCoal have entered into a Pre-Bid Acceptance Deed.
A draft of the Pre-Bid Acceptance Deed was released to the ASX on
13 July 2011 and is available at www.asx.com.au. The final version of
the Pre-Bid Acceptance Deed as entered into between the parties was
not different from the version released to the ASX on 13 July 2011. The
key terms of the Pre-Bid Acceptance Deed are that AM will procure:
• the acceptance of the Offer in respect of the 48,552,062
Shares it owns by no later than the second Business Day
after the date on which PEAMCoal notifies the ASX that it has
a Relevant Interest in, and the acceptance collection agent
under any institutional acceptance facility relating to the Offer
has received acceptance instructions in respect of the Offer
for, at least 50.01% of the Shares (including the 48,552,062
Shares); and
• that, once accepted, the above acceptance not be
withdrawn, even if the acceptance may be withdrawn by law,
under the terms of the Offer or otherwise.
10.5 Deed of Guarantee
Peabody Energy, PAC2, ArcelorMittal, AM, AM BV2 and PEAMCoal
Holdings have entered into a Deed of Guarantee. A draft of the
Deed of Guarantee was released to the ASX on 13 July 2011 and
is available at www.asx.com.au. The final version of the Deed of
Guarantee as entered into between the parties was not materially
different from the version released to the ASX on 13 July 2011.
The key terms of the Deed of Guarantee are that:
• Peabody Energy guarantees to AM and AM BV2, the
obligations of PAC2 under the Co-operation and Contribution
Agreement and the Shareholders’ Deed; and
• ArcelorMittal guarantees to PAC2 and PEAMCoal Holdings,
the obligations of AM and AM BV2 under the Co-operation
and Contribution Agreement, the Shareholders’ Deed and the
Pre-Bid Acceptance Deed.
10.6 Macarthur dividends
Under the terms of the Offer, Macarthur may announce, declare or
pay the Permitted FY11 Dividend without any reduction being made
by PEAMCoal to the Offer price.
If Macarthur announces, declares or pays:
• any dividend or distribution (other than the Permitted FY11
Dividend), PEAMCoal will be entitled to reduce the Offer price
by the amount of any such dividend or distribution; and
• any dividend or distribution (other than the Permitted FY11
Dividend, any Permitted Other Dividend or any dividend
or distribution announced, declared or paid with the prior
written consent of PEAMCoal), PEAMCoal will have a right to
withdraw the Offer as this will trigger the defeating condition
contained in section 11.7(i)(12).
10.7 Broker handling fee arrangements
As at the date of this Bidder’s Statement, PEAMCoal had not made a
decision as to whether to offer to pay a commission to brokers who
solicit acceptances of the Offer by a Macarthur Shareholder. However,
PEAMCoal reserves the right to introduce such an arrangement.
10.8 Institutional acceptance facility
As at the date of this Bidder’s Statement, PEAMCoal had not made a
decision as to whether to introduce an institutional acceptance facility
in connection with the Offer. However, PEAMCoal reserves the right to
introduce such a facility.
10.9 Date for determining holders of
Macarthur Shares
For the purposes of section 633 of the Corporations Act, the date
for determining the people to whom information is to be sent under
items 6 and 12 of subsection 633(1) is the Register Date.
10.10 Interests in Shares
As at the date of this Bidder’s Statement:
• PEAMCoal’s Voting Power in Macarthur was approximately
16.1%; and
• PEAMCoal had a Relevant Interest in 48,552,062 Shares.
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