Common use of ARRANGEMENT STRUCTURE Clause in Contracts

ARRANGEMENT STRUCTURE. As with the previously proposed combination, Fording Trust will hold an interest in a coal partnership that will hold Fording's and Teck Cominco's metallurgical coal assets, and to which will be added the metallurgical coal assets of Luscar and CONSOL. The Luscar/CONSOL assets consist of the Line Creek mine, the Luscar mine, the undeveloped Cheviot deposit and a 46.4% interest in Neptune Bulk Terminals (Canada) Ltd. Fording Trust will initially hold a 65% interest in the coal partnership and 100% of Fording's industrial minerals business. Teck Cominco will contribute its metallurgical coal assets, including the Elkview mine and $125 million to the partnership for an initial 35% interest. As manager of the coal partnership, Teck Cominco will have the right to earn up to an additional 5% interest over a four-year period, bringing its interest to 40%, if the partnership achieves specified operating synergies. Teck will no longer have the right to exchange its interest in the coal partnership into units of the Fording Trust. Existing Fording shareholders, other than Teachers', will hold 18.3 million units of Fording Trust representing 38.8% of the trust. (All trust ownership percentages assume full cash election). Sherritt Coal Partnership II will invest $375 million comprised of an investment of $275 million by Teachers' and $100 million by Sherritt, and will own a 22.7% interest in Fording Trust. Because Teachers' has agreed to accept all units for its 3.2 million Fording shares, it will hold a 6.7% interest in Fording Trust directly.

ARRANGEMENT STRUCTURE. As with the previously proposed combination, Fording Trust will hold an interest in a coal partnership that will hold Fording's ’s and Teck Cominco's ’s metallurgical coal assets, and to which will be added the metallurgical coal assets of Luscar and CONSOL. The Luscar/CONSOL assets consist of the Line Creek mine, the Luscar mine, the undeveloped Cheviot deposit and a 46.4% interest in Neptune Bulk Terminals (Canada) Ltd. Fording Trust will initially hold a 65% interest in the coal partnership and 100% of Fording's ’s industrial minerals business. Teck Cominco will contribute its metallurgical coal assets, including the Elkview mine and $125 million to the partnership for an initial 35% interest. As manager of the coal partnership, Teck Cominco will have the right to earn up to an additional 5% interest over a four-year period, bringing its interest to 40%, if the partnership achieves specified operating synergies. Teck will no longer have the right to exchange its interest in the coal partnership into units of the Fording Trust. Existing Fording shareholders, other than Teachers'’, will hold 18.3 million units of Fording Trust representing 38.8% of the trust. (All trust ownership percentages assume full cash election). Sherritt Coal Partnership II will invest $375 million comprised of an investment of $275 million by Teachers' ’ and $100 million by Sherritt, and will own a 22.7% interest in Fording Trust. Because Teachers' ’ has agreed to accept all units for its 3.2 million Fording shares, it will hold a 6.7% interest in Fording Trust directly. Teck Cominco and Westshore Terminals will each invest $150 million in Fording Trust units and each will own 9.1% of Fording Trust. The coal partnership also will enter into a long-term port services contract with Westshore Terminals on commercial terms previously negotiated between Fording and Westshore. Luscar and CONSOL will each receive 3.2 million units of Fording Trust in exchange for their contribution of assets, resulting in each having a 6.8% interest. Fording Trust is expected to have pro forma consolidated capitalization of approximately $2.0 billion including pro forma consolidated debt of approximately $336 million, before working capital. Fording’s existing foreign exchange hedge contracts will remain in place. Sherritt Coal Partnership II will purchase all of Fording’s prairie coal operations and assets for $225 million. The Fording Trust will retain a royalty, capped at a maximum of 5% of gross revenue, on production from certain coal properties included in the sale. Upon successful completion of the transaction, Fording has agreed to pay the expenses incurred by Teck Cominco, Westshore Terminals and Sherritt Coal Partnership II in carrying out the various transactions required to form the new trust, to a maximum of $75 million. The Board of Directors of Fording Inc. has received the opinion of its financial advisors, RBC Capital Markets, that the consideration under the plan of arrangement is fair, from a financial point of view, to Fording shareholders. The Board of Directors of Fording unanimously recommend that shareholders vote in favour of the new plan of arrangement. Fording shareholders will vote on a revised plan of arrangement to effect the proposed transaction at a special meeting to be scheduled shortly with the intention of completing the transaction in February 2003. They will shortly receive a supplement to Fording’s information circular, including the reasons for the Board’s recommendation that shareholders approve the plan. Fording expects that the combination, with its greater potential for synergies, will result in significantly enhanced distributable cash flow per unit compared with any of the previous alternatives presented to shareholders. Since the closing of the plan of arrangement is expected to be deferred to February 2003, the level of distributable cash for the first quarter will not reflect the full benefits of the trust structure. The Fording Trust will have strong corporate governance features that meet the highest standards of independence. Fording Trust will have a majority of independent trustees and its operating company will have a majority of independent board members. The Chairman and Chief Executive Officer of the Fording Trust will be M▇▇▇▇▇▇ ▇▇▇▇▇▇▇, who is currently an independent director of Fording. J▇▇ ▇▇▇▇▇▇▇▇ will be President and Chief Executive Officer of the coal partnership and will be President of the Fording Trust. I▇▇ ▇. ▇▇▇▇▇▇▇, Chairman of Sherritt commented: “We are pleased that the process we commenced in October has led to such a successful result for Sherritt while at the same time contributing to the rationalization of the Canadian coal industry. This consolidation transaction permits Sherritt to leverage its investment in each of its metallurgical and thermal coal businesses. The addition of the Fording Prairie operations and its substantial reserves complement Luscar’s already significant thermal coal position. By adding the stable, long-term cash flow of the Genesee operation and the royalty income from the thermal coal lands, Luscar’s cash flow will be strengthened and will become a larger influence on Sherritt’s overall results. The consolidation of our metallurgical operation with those of our new partners offers the prospect of more efficient operations and a more substantial presence in the international marketplace.” “Teachers’ is pleased to have been the catalyst for the creation of this new trust, which brings together Canada’s premier metallurgical coal mining properties,” said B▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice-President of Global Active Equities for Teachers’. “The high quality of the coal produced, the long life of the reserve base, the prominent position the Fording Trust will have in international metallurgical coal markets and the wealth of experience available to manage these assets, makes the Fording Trust a benefit to Canada and an attractive investment for Teachers’. Investors will be able to participate in a trust that will have a sound capital structure with excellent corporate governance. We intend to fully support this new plan and will exchange our Fording shares for units.” D▇▇▇▇ ▇▇▇▇▇▇▇▇, Deputy Chairman and Chief Executive Officer of Teck Cominco Limited said: “The agreement announced today creates a world class competitor in the metallurgical coal industry. Teck Cominco, as manager of the coal partnership, looks forward to creating substantial value through operating efficiencies and other synergies. This transaction furthers our diversification strategy, adding a substantial stake in a 25 million tonne coal producer to our existing base metal and other interests.” Westshore Terminals Income Fund Chairman W▇▇▇▇▇▇ ▇▇▇▇▇▇▇ added: “Westshore is pleased to make a significant investment in units of this exciting new trust and to have played a supporting role in bringing together Canada’s three principal metallurgical coal companies, all of which have been key customers at the Westshore coal terminal for over a quarter century. The scale and efficiencies created by this agreement will benefit everyone involved.” “We are embarking on the most significant transformation in the history of the Canadian coal industry,” said J▇▇ ▇▇▇▇▇▇▇▇, President and Chief Executive Officer of Fording Inc. “For the past several months, we have managed a process that has resulted in substantial value realized for our shareholders. However, on behalf of the management teams at each company, I want to assure all employees of our commitment to making this transition as smooth as possible. There will be changes, but we will all benefit from being part of a larger, stronger and more competitive organization.” Fording Inc. is Canada’s largest and most productive producer of export metallurgical coal. Its three mines in southern British Columbia produce high-quality metallurgical coal for the international steel industry. The Company’s Prairie Operations supply thermal coal to electrical utilities. Fording is also the world’s largest producer of the industrial mineral wollastonite. Further information can be found at w▇▇.▇▇▇▇▇▇▇.▇▇.