Plaintree expects merger will get nod in November
Shareholders upbeat: 'Aired all dirty laundry of
the past year'
Jill Vardy
Financial Post
OTTAWA - Plaintree
Systems Inc. will ask
its shareholders in
November to approve
its proposed merger
with Targa Group, the
company told its
annual meeting
yesterday.
The merger, which
Plaintree executives
expect will be
approved, is the
culmination of a year
that has left Plaintree in
vastly different shape
than it was at last
year's annual meeting.
Jay Richardson,
Plaintree's chief
executive, said
shareholders were
optimistic and upbeat
at yesterday's meeting,
despite a year that
began with Nortel Networks Ltd. investing $9-million in Plaintree,
which makes switches for the telecommunications market, and ended
with the company fighting for its life.
"We aired all the dirty laundry of the past year today," Mr. Richardson
said after the meeting.
"My objective had been to deal with all of this once and for all, put it
behind us and look to the future in combination with Targa. And the
reaction of the shareholders seems to be confirming my view that this
was the right thing to do."
Plaintree's salvation is the merger with Targa, a profitable private
company that makes electronic equipment for the aerospace sector.
Plaintree, faced with mounting losses and slow sales of its gigabit
ethernet switches, wants to assume control of Targa's business in
exchange for 49% of Plaintree's shares.
Shareholders will receive a proxy information circular on the proposed
deal in the next few weeks. A special meeting to vote on the proposal
will be held sometime in November, Mr. Richardson said.
The deal also requires approval of Nortel and Acktion Corp., which hold
large blocks of preferred shares that must be converted to common
shares.
Mr. Richardson said the deal shouldn't be seen as a reverse takeover of
Plaintree by Targa. "In terms of the legalities of it, it's important to
understand it's not an RTO at all," he said.
"We are acquiring 100% of Targa. In exchange, existing Targa
shareholders get 49% of the then-resulting outstanding shares of
Plaintree and a debenture for 2.8 million."
Plaintree will continue to be publicly traded on the Toronto Stock
Exchange. Its shares closed unchanged at 77½ yesterday.
Plaintree's proposal to pay about 200 unsecured creditors up to 80½ on
the dollar was unanimously approved last week.
That proposal, which is still subject to a routine approval by the courts,
eliminates another roadblock in the merger plans by establishing
timetable over 18 months for the satisfaction of unsecured creditor
claims. |
