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SUPPLIERS REPORT Financing is Secured for Magnetation's New Plants Magnetation LLC announced on May 21 that it had successfully completed a $325-million senior secured notes offering and has entered into a $50-million senior secured credit facility. The proceeds from the notes offering will be used for capital expenditures to construct a new concentrate reclamation plant northwest of Coleraine, Minnesota, USA, and a 3-million-mt/y plant in Reynolds, Indiana, to produce high-quality iron ore pellets. Production from the pellet plant will supply AK Steel's blast furnaces located in Ohio and Kentucky. In addition, Magnetation announced it had received a $50-million contribution from AK Steel as part of AK steel's remaining $150-million commitment to Magnetation. Thus far, AK Steel has invested approximately $200 million of a planned $300 million. AK Steel will contribute the final $100 million during 2014 or as needed to support the construction of the new pellet plant. Larry Lehtinen, CEO of Magnetation, said, "With this financing secured, we anticipate producing high quality fluxed pellets during the fourth quarter of 2014. Upon startup of the pellet plant and Plant 4, Magnetation will become a four million tonne per year iron ore producer employing about 500 people, providing high quality iron oxide pellets to AK Steel, low residual iron ore concentrate to AHMSA of Mexico and high grade iron oxides to various specialty market customers." Magnetation LLC is a joint venture between Magnetation, Inc. (50.1%) and AK Steel Corp. (49.9%). Magnetation LLC reclaims iron ore concentrate from previously abandoned iron ore waste stockpiles and tailings basins. Currently, Magnetation LLC owns and operates two reclamation plants located in Keewatin and Taconite, Minnesota, respectively. Metso to Spin Off Pulp & Paper Business, Keep Mining & Construction Metso Corp. announced at the end of May that it plans to transfer all of the assets, debts and liabilities of its pulp, paper and power businesses to a newly formed company that will be named Valmet Corp. An application will be made to list the shares of Valmet on the NASDAQ OMX Helsinki stock exchange. Following the demerger, Metso's mining and construction and automation businesses will remain in the current company, which would continue to operate under the Metso name. Valmet would be independent, without any cross-ownership between Metso and Valmet. The move follows a strategy study conducted by Metso's board of directors that indicated going forward with a "demerger" would offer the pulp, paper and power businesses, as well as its mining and construction and automation businesses the best opportunities to utilize their respective strengths in their specific industries. According to a Metso press statement, the increased management and board focus should help the two independent companies achieve stronger growth and improved profitability. This would also be expected to result in increased value for shareholders inasmuch as both companies would have their own distinct characteristics and would offer different investment profiles. The demerger will require the approval of an extraordinary general meeting of Computer-generated view of facility layout at the $350-million iron ore pellet plant currently under construction by Magnetation LLC at Reynolds, Indiana. 78 E&MJ; • JULY 2013 Metso and the registration of the completion of the demerger with the Finnish Trade Register following the creditor hearing process pursuant to the Finnish Companies Act. If approved, the planned registration date of completion of the demerger is December 31, 2013, and public trading in new Valmet shares on NASDAQ OMX Helsinki is expected to commence as soon as possible thereafter. Metso will propose at the extraordinary general meeting that the Metso board would, after the completion of the demerger, partly consist of those of its current members who will not become members of the Valmet board, and partly of one or more new members to be elected by the extraordinary general meeting. Upon registration of the completion of the demerger, Metso shareholders would receive, as demerger consideration, one share in Valmet for each Metso share that they hold. No action would be required from shareholders to receive this demerger consideration, according to Metso. Jukka Viinanen, Metso's chairman of the board, said the board of directors recommends that shareholders approve the demerger. "After carefully reviewing various alternatives that would accelerate the implementation of Metso's strategy and its growth, the board has concluded that spinning off Metso's pulp, paper and power businesses through a demerger offers the best potential to increase the focus and ambition of Valmet and Metso and the implementation of their respective distinct growth strategies. The board believes that this, together with the creation of two attractive investment alternatives, would also create strong potential to increase value for Metso's shareholders." Metso released certain key financial figures for each proposed company based upon consolidated pro-forma balance sheets and income statements as of and for the year ended December 31, 2012. The figures show: • Metso Corp. with total assets of €4,005 million, total equity of €1,362 million, gross debt of €1,095 million, net debt of €388 million, net sales of €4,499 million, and EBITA before nonrecurring items of €496 million. • Valmet Corp. with total assets of €2,637 million, total equity of €865 million, gross debt of €195 million, net debt of €-72million, net sales of €3,005 million, and EBITA before nonrecurring items of €192 million. www.e-mj.com