AMG affiliate Timminco to form joint venture with Dow Corning at Bécancour Silicon Metal Facilities

2010-08-11

AMG Advanced Metallurgical Group N.V.'s publicly listed affiliate, Timminco Limited recently announced that it has agreed to form a joint venture with Dow Corning Corporation at its silicon metal production facilities in Bécancour, Québec. Dow Corning will acquire a 49% equity interest in a new joint venture entity that will own the existing silicon metal operations of Timminco's wholly-owned subsidiary, Bécancour Silicon Inc. In exchange, BSI will receive net cash proceeds of $39.7 million on closing, and up to potentially an additional $10.0 million after closing subject to achieving certain performance objectives relating to production cost and capacity improvements. BSI will retain a 51% equity stake in the Joint Venture.

All of the production output of the Joint Venture, which will be based on an initial annual production capacity of 47,000 mt of silicon metal, will be split between BSI and Dow Corning proportional to their ownership interests. All of BSI's solar grade silicon purification operations and facilities at the Bécancour site will remain with BSI.

"This joint venture with Dow Corning builds on a long and successful relationship between the two companies and strengthens Timminco's position for future growth opportunities," said Dr. Heinz C. Schimmelbusch, Timminco's Chairman of the Board and Chief Executive Officer.

"This acquisition is well aligned with Dow Corning's global strategy of securing an efficient supply of this critical raw material used to manufacture all of our silicon-based products," said Robert Hansen, Dow Corning's executive vice president and general manager of Core Products.

The Joint Venture, which will be known as "Québec Silicon", will acquire from BSI all of the silicon metal production assets, including property, plant, equipment, and certain net working capital items, and BSI's quartz mining lease in Lac Malbaie, Québec. BSI will retain its silicon metal customer relationships, and honour all existing contracts with such customers, through BSI's proportional off-take of the Joint Venture's production.

All active employees associated with the silicon metal operations will be transferred to the Joint Venture, which will assume certain liabilities associated with such employees, including pension obligations. The transferring employees include a majority of BSI's existing management team, which will continue to manage and operate the silicon metal operations.

The creation of the Joint Venture and the closing of Dow Corning's acquisition of its 49% equity interest are expected to occur on or about September 30, 2010. The closing is subject to satisfaction of customary closing conditions, including regulatory approvals and consent of BSI's lenders. In the event the conditions are not fulfilled and the transactions do not proceed, BSI and Dow Corning have committed to alternative supply arrangements for 20,000 metric tons of silicon metal to be delivered in 2011.