PotashCorp filed an amended complaint for injunctive and other relief against BHP Billiton, citing internal documents that support its case that BHP made materially misleading statements and omissions in connection with its hostile takeover attempt of PotashCorp. PotashCorp asked that BHP’s tender offer be enjoined from closing on November 18, 2010.
PotashCorp provides new information in four categories: what it calls BHP’s false and misleading information about its intention to build the Jansen potash mine, which adversely impacted PotashCorp’s share price; BHP’s information about its plans for PotashCorp’s businesses; BHP’s information about the background of the offer; and BHP’s statements about the nature, condition, and uncertainties in the tender offer.
As early as 2006, PotashCorp says BHP current CEO Marius Kloppers and current Chief Commercial Officer Alberto Calderon recommended that BHP buy PotashCorp at a price of $13 billion, but the proposal was rejected by then BHP CEO Chip Goodyear. However, according to the filing, BHP did engage third parties to perform various assessments of PotashCorp and internal documents raised the question of whether “it is better to build or/and buy [PCS] or other established capacity in Canada.” BHP documents also said Kloppers instructed Calderon to “stalk [PCS] with intent.”
In 2009, BHP’s President, Diamonds and Specialty Products, Graham Kerr, in a “fireside chat” with the BHP board, said that an acquisition of PCS was “a logical choice to accelerate delivery of our strategic goals,” in light of the time and money needed to build a “Top 3 global player” in potash. According to the filing, BHP considered a bid for PotashCorp in 2009, but other factors intervened, as well as the need to develop a plan to sell PotashCorp’s nitrogen and phosphate assets. PotashCorp cited other internal documents indicating that it was BHP’s plan all along to shed those assets, with a presentation to the BHP board in March 2009 noting that “N&P assessed and not for us.”
By early 2010, the PotashCorp acquisition was deemed “Project Porcupine.”
PotashCorp argues that by March 2009, BHP had devised a plan to depress PotashCorp’s stock price through a series of actions. According to the filing, BHP’s executives realized that BHP had a “big advantage” because its “balance sheet means [it is] a major threat to the stability of the existing club of players.” BHP officials agreed that it not contact PotashCorp just yet, but “be very noisy about what [it has], [its] future plans and [its] disruptive influence on the current state of affairs.”
Thereafter, according to the filing, it appeared that BHP touted the Jansen project and the impact that an 8 million mt/y mine, running flat out, would have on the potash market. BHP inroads into the potash industry Anglo American, Athabasca, etc. were timed to coincide with positive news to be released by PotashCorp. PotashCorp noted that when its share price hit an all-time high on June 23, 2008, Kloppers forecasted that BHP could invest billions in potash over the next decades.
PotashCorp pointed to several analysts’ opinions that detailed the perceived impact of BHP’s announcements on PotashCorp stock.
PotashCorp also pointed to documents that suggest the 8 million mt/y Jansen pronouncements were simply a ruse to degrade PotashCorp’s stock. It noted that BHP did not waste a chance to tout the project, while internally downplaying the project. While BHP announced $240 million for capital expenditures on the project on Jan. 20, 2010, PotashCorp said BHP failed to disclose that Kerr “had instructed the Jansen project team to freeze work on the go forward case and review the alternative phasing options for Jansen” in light of the “significant increase in capital estimates … to complete an 8 million mt per annum facility.” In February, 2010, the filing says, Kloppers instructed Kerr and Chief Executive Non-Ferrous Andrew Mackenzie to tell the development team that “if you build everything you want up front – we will not build anything at all.” The filings said Kerr reported that Kloppers wanted to do no more than a 2 million mt mine and to do “baby steps,” and that Kloppers told Kerr that “[a]t this stage, he could not imagine the GMC/Board approving a capital request greater than (redacted) for a new asset in a new industry” and thus “for the first investment” BHP was not going to do more than put “a toe in the water.”
By July 27, 2010, the filing said Kloppers saw the scaleddown mine as offering little chance for approval. “There is little doubt in my mind that we will not get this project over the line as envisaged at the moment. I want to be very clear on this element – lest there is any misunderstanding later. Simply put – I do not see how we take the step on the sinking of the shaft based on what we know today (even in a non-[PCS] world).” He then warned Mackenzie that “[e]ither the team makes a very dramatic step change or they get shut down in due course. That is the simple brutal truth.”
Still, BHP continued to tout the Jansen project. However, by October 2010, Jansen was not put forward for consideration by the BHP board though Kerr had argued that it should be as it would help with showing that “Jansen is not a smokescreen.” PotashCorp argues that it is unclear when, if ever, the project will go forward.
PotashCorp also reiterated BHP’s mixed signals on Canpotex Ltd., noting the concurrence of Saskatchewan Energy and Resources Minister Bill Boyd, who on Oct. 4, 2010, was quoted as saying, “The CEO [Kloppers], to be frank, he’s been a little bit all over the place. At one point in time they were talking about a completely outside of Canpotex model, then they said they would consider it, now they’re saying they like to quote unquote, ‘Stand before the customer.’ ”