Other US shareholders are free to use this form and contact Mr. Shapray or another Canadian lawyer for an opinion:
August 17, 2000
Howard Shapray
Shapray Cramer & Associates
Suite 670 - World Trade Centre
999 Canada Place
Vancouver, BC V6C 3E1
Dear Mr. Shapray,
I am a retired attorney and think I may have a cause of action against Winspear
Diamonds and their board of directors, with whom I know you are familiar. I believe it
would be a class action lawsuit, the class being all US citizens who have invested in
Winspear and held shares on August 14, 2000, the date the board accepted the DeBeers
takeover offer of $5/share that specifically excluded US shareholders of Winspear in the
offer.
The board of directors failed to take any steps to protect the rights of US shareholders of
Winspear stock and as a result US shareholders, unlike non-US shareholders who can
tender their shares to DeBeers and thus avoid the costs of commissions and market
spreads, are being forced to sell on the open market. In my case if you take the
difference between the $5 tender price DeBeers is offering and the market price and
add to that commissions I would pay, you have in excess of US$(large number). Multiply that
by thousands of US shareholders, and I think you can imagine the total damages.
As I write, there is another potential problem: if a 3rd party should make a higher bid for
Winspear before the expiry of the DeBeers offer, US shareholders who followed the
unanimous advice of the board of directors to sell their shares will be further damaged, as
they, unlike the Canadian shareholders, will not be able to retrieve their original shares
from DeBeers, having instead being forced to sell in the open market. The situation gets
dicier as the expiry date approaches: When do I sell? The expiry date on DeBeers offer
is the 25th. If I wait until the 24th for a 3rd party bid, will the market turn illiquid and
cause me to get a market price of $4.80/sh instead of the $4.97 available on the 17th?
Should I act on the 22nd or 23rd? But what if I see the ask/bid going lower and lower
and sell on the 23rd for $4.80, only to see a 3rd party offer $6/sh? The Winspear board
blames all that on DeBeers, but is it not complicit, having failed to take any action to
insure that all its shareholders are treated equally? They could have demanded that US
shareholders be reimbursed for any damages they incurred by being treated as second
class shareholders, could they not? They could have set aside monies to reimburse US
shareholders for their injuries.
As I write, no third party has come forward with a bid, and if one does come forward
before I sell my shares in the open market, this issue may be moot for me (but not for US
shareholders who sold on the basis of the Winspear board’s recommendation). I am
wondering, assuming that the DeBeers bid is not trumped, or if it is trumped after I have
sold my shares in the open market, if you would be interested in handling the case?
Please also explain any fee structure and whether contingent fees are allowable in
Canada in such a case as I’ve outlined. Thank you.
Sincerely yours,
DiamondWillie
US Citizen currently residing under Snap Lake
NWT, Canada |
