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Falconbridge Adopts Shareholder Rights Plan

Posted on: Thursday, 22 September 2005, 18:00 CDT

Plan Will Prevent Progressive Acquisition of Control, Force Offer to All Shareholders

Falconbridge Limited (TSX:FAL.LV)(NYSE:FAL) announced today that the Board of Directors of the Company has adopted a shareholder rights plan, effective immediately, designed to enhance the Company's ability to obtain the best value for all shareholders and prevent a bidder from acquiring control of Falconbridge in a manner detrimental to shareholders.

The rights plan will prevent an attempt to acquire control of the Company other than by means of an offer made to all shareholders. "Some of our shareholders have voiced concerns with the possibility of a creeping takeover," said Falconbridge's Chief Executive Officer, Mr. Derek Pannell. "The plan will give the Board of Directors an effective tool in responding to an attempt to acquire control through a progressive increase in ownership without an offer to all shareholders. If the actions of a bidder resulted in the acquisition of Falconbridge, we would want to make sure shareholders are treated fairly."

The rights issued under the rights plan become exercisable when a person, together with any parties related to it, acquires or announces its intention to acquire 20% or more of the Corporation's outstanding common shares without complying with the "Permitted Bid" provisions of the rights plan or without approval of the Board of Directors of the Corporation. Should such an acquisition occur, rights holders (other than the acquiring person and related persons) can purchase common shares of the Corporation at half the prevailing market price at the time the rights become exercisable. Each right, upon exercise, would permit the purchase of shares of the Corporation at a substantial discount to the market price, as defined in the Rights Plan. As a result of the current ownership of Xstrata plc of more than 20% of the voting shares, Xstrata will be grandfathered under the plan, but cannot increase percentage ownership of the Voting Shares of the Corporation other than in certain specified circumstances.

Under the rights plan, a Permitted Bid is a bid made to all holders of the Corporation's common shares for all of their shares that is open for acceptance for not less than 60 days. If at the end of 60 days at least 50% of the outstanding shares, other than those owned by the offeror and certain related parties have been tendered, the offeror may take up and pay for the shares but must extend the bid for a further 10 days to allow other shareholders to tender.

The rights plan must be confirmed by shareholders within 6 months.

Advisory Support

To facilitate the evaluation and review of all value creation opportunities, the Company has retained the services of CIBC World Markets as financial advisors and McCarthy Tetrault as legal advisors.

Falconbridge Limited is a leading copper and nickel company with investments in fully-integrated zinc and aluminum assets. Its primary focus is the identification and development of world-class copper and nickel mining deposits. It employs 14,500 people at its operations and offices in 18 countries. Falconbridge's common shares are listed on the New York Stock Exchange (FAL) and the Toronto Stock Exchange (FAL.LV). Falconbridge's website can be found at www.falconbridge.com.

Falconbridge Limited (TSX:FAL.LV) (NYSE:FAL)

Source: Business Wire

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