ORKO ANNOUNCES SUPERIOR PROPOSAL

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Published : February 14th, 2013
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FOLLOW : Canada Silver

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ORKO ANNOUNCES SUPERIOR PROPOSAL

VANCOUVER, BC, CANADA – Orko Silver Corp. (“Orko” or the “Company”) (TSX-V: OK; Frankfurt: OG3; OTCUS: OKOFF) announces that it has received a binding proposal from Coeur d’Alene Mines Corporation (“Coeur”) for the acquisition by Coeur of all of the issued and outstanding common shares of Orko (the “Orko Shares”) by way of a plan of arrangement (the “Coeur Proposal”). The Board of Directors of Orko (the “Orko Board”) has unanimously determined, after receiving the advice of its financial and legal advisors, that the Coeur Proposal constitutes a “Superior Proposal” pursuant to the arrangement agreement between Orko and First Majestic Silver Corp. (“First Majestic”) originally announced on December 16, 2012 (the “First Majestic Agreement”) and has provided notice of such determination to First Majestic.

Under the terms of the Coeur Proposal, Orko shareholders may elect to receive in exchange for each Orko Share:

  • ·         0.0815 common shares of Coeur (“Coeur Shares”) and C$0.70 cash and 0.01118 warrants to purchase Coeur Shares (“Coeur Warrants”);
  • ·         0.1118 Coeur Shares and 0.01118 Coeur Warrants, subject to pro-ration as to the number of Coeur Shares if the total number of Coeur Shares elected by Orko shareholders exceeds approximately 11.6 million; or
  • ·         C$2.60 in cash and 0.01118 Coeur Warrants, subject to pro-ration as to the amount of cash if the total cash elected by Orko shareholders exceeds C$100 million.

If all Orko shareholders were to elect either the all cash (and Coeur Warrants) or the all share (and Coeur Warrants) alternative, each Orko shareholder would receive 0.0815 Coeur Shares and C$0.70 in cash, together with 0.01118 Coeur Warrants, for each Orko Share. Each whole Coeur Warrant will be exercisable for one Coeur Share for a period of four years at an exercise price of US$30.00, all subject to adjustment in accordance with the terms of the Coeur Warrants.

Based on the closing price of Coeur Shares on the New York Stock Exchange (“NYSE”) on February 12, 2013 (and $0.08 of warrant value per Orko Share), the Coeur Proposal implies a value of C$2.70 per Orko Share.  The Coeur Proposal represents a premium of approximately 25% to the implied value of the consideration offered pursuant to the First Majestic Agreement based on the February 12, 2013 closing price of both Coeur and First Majestic’s common shares on the NYSE and Toronto Stock Exchange, respectively.

Except for the consideration being offered, the agreement proposed by Coeur is substantially similar to the First Majestic Agreement, including with respect to the treatment of outstanding options to purchase common shares of the Company. The proposed agreement with Coeur includes a termination fee, payable to Coeur in certain circumstances, of C$11.6 million, consistent with the termination fee payable to First Majestic under the First Majestic Agreement.

Under the terms of the First Majestic Agreement, First Majestic has a period of five business days, expiring at 11:59 pm PT on Tuesday, February 19, 2013 (the “Response Period”), during which to offer to amend the terms of that agreement.

If, within the Response Period, First Majestic offers to amend the First Majestic Agreement such that the Orko Board determines that the Coeur Proposal is no longer a Superior Proposal, Orko will be required to enter into an amendment to the First Majestic Agreement and implement the amended agreement. In that circumstance, no agreement will be entered into between Orko and Coeur with respect to the transaction proposed by Coeur.

If, within the Response Period, First Majestic does not offer to amend the First Majestic Agreement, or if the proposed Coeur transaction continues to be a Superior Proposal following a proposed amendment to the First Majestic Agreement by First Majestic, Orko intends to pay First Majestic the agreed termination fee of C$11.6 million, terminate the First Majestic Agreement and enter into the agreement proposed by Coeur.  In that event, the directors and officers of Orko will enter into lock-up agreements with respect to the transaction proposed by Coeur (on substantially the same terms as the lock-up agreements they entered into with First Majestic) pursuant to which, among other things, they will agree to vote in favour of the transaction proposed by Coeur at a special meeting of securityholders of Orko to be called to consider such transaction.

In conjunction with the Coeur Proposal, Coeur has proposed to provide Orko with an C$11.6 million convertible loan to finance the First Majestic termination fee (the “Coeur Loan”).  Orko would enter into the Coeur Loan concurrently with the execution of the agreement proposed by Coeur.


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