Maybe the new federal Minister of Industry can interpret this for the thread.
---------------<snip>-----------------------------
sedar.com
-
Class VBN Shares
In August 1996, the Company issued 25.9 million Class VBN Shares valued at $753 million in connection with the acquisition of Diamond Fields. The Class VBN Shares are listed on the New York, Toronto and Montreal stock exchanges.
The Class VBN Shares are a new class of equity shares which are intended to reflect an interest, aggregating approximately 25%, in the financial performance of the Voisey’s Bay project and all future discoveries in Labrador with respect to which VBNC has the right to explore and develop, as well as in existing exploration properties in Norway and Greenland which were held by Diamond Fields as of August 21, 1996. Accordingly, the dividend policy adopted by the Board of Directors in respect of the Class VBN Shares provide holders with a financial return based on the performance of VBNC operations and not any other subsidiaries, divisions or operations of the Company. Holders of Class VBN Shares have no direct rights in the equity or assets of VBNC or in the assets of the Company, except on a liquidation, dissolution or winding-up of the Company as described under “Liquidation, Dissolution or Winding-Up” on page 46 of this Report.
Voting Rights and Directors
The Class VBN Shares (together with the Common Shares and the Series E Preferred Shares) have general voting rights. The holders of Class VBN Shares are entitled to receive notice of, to attend (in person or by proxy) and be heard, and to vote on the basis of one vote, subject to adjustment in the event of certain major corporate changes, in respect of each such share held, at all meetings of the shareholders of the Company other than meetings at which holders of another class or series of shares are entitled to vote separately.
The holders of the Class VBN Shares, voting separately as a class, are entitled to elect two directors of the Company. The current class directors in respect of the Class VBN Shares are J.M.Y. (Max) Boulle and Edward Mercaldo. Messrs. Boulle and Mercaldo will hold office for a term expiring at the close of the 1998 Annual Meeting of Shareholders of the Company.
If, while any Class VBN Shares are outstanding, the Company effects certain stock splits or other specified reorganizations, the number of votes per Class VBN Share would be adjusted, subject to certain exceptions.
The holders of the Class VBN Shares are entitled, voting separately as a class, to one vote in respect of each Class VBN Share held in respect of certain specified major corporate events such as a sale of all or substantially all of the Company’s assets, dissolution, winding-up or similar events.
Dividends
Subject to any preference as to dividends attached to the Preferred Shares and any other class or series of shares in the Company's capital stock ranking in priority to the Class VBN Shares as to dividends, the holders of the Class VBN Shares are entitled to receive, and the Company shall pay, out of the moneys or property of the Company properly applicable to the payment of dividends, such dividends (if any and in such form) as the directors may in their discretion declare in respect of the Class VBN Shares.
The directors of the Company, in their sole discretion, may declare dividends in respect of the Class VBN Shares without declaring dividends in respect of the Common Shares and vice versa. If the directors declare dividends payable in respect of both the Common Shares and Class VBN Shares, the directors may in their sole discretion declare dividends payable in respect of each such class in equal or unequal amounts and at the same time or at different times, provided that any and all dividends declared on the Common Shares and the Class VBN Shares shall rank equally as to the entitlement to receive payment of any such dividends so declared, without preference or distinction. However, until August 21, 2006, to the extent that dividends which are declared and paid in accordance with the Company's dividend policy with respect to the Class VBN Shares do not provide holders with dividends on a per share basis equal to at least 0.8 times (subject to certain adjustments) (the "Dividend Factor") the per share regular cash dividends declared and paid on the Common Shares in any year, dividends shall be declared in respect of the Class VBN Shares in a per share amount of not less than 0.8 times the per share amount of the regular cash dividends declared in respect of the Common Shares for such year. This entitlement does not extend to any special dividends or non-cash dividends declared on the Common Shares.
The Board of Directors of the Company has adopted a dividend policy in respect of the Class VBN Shares which provides that it is the intention of the Board of Directors to declare, on the Class VBN Shares as a class, on a quarterly basis in arrears, non-cumulative cash dividends equal to the Adjusted Net Income of VBNC multiplied by the Ownership Factor. The Adjusted Net Income of VBNC is determined quarterly and will generally be equal to the separate net income or loss of VBNC after adding back non-cash charges, including the effects of purchase accounting resulting from the Company’s acquisition of Diamond Fields, less the sum of (a) projected principal debt payments and capital expenditures of VBNC for the next succeeding quarter after the quarter in respect of which the particular dividend is being calculated, and (b) cash to be retained as reserves to cover any liabilities for which adequate reserves have not already been established. The Ownership Factor is the fraction where the numerator is the Class VBN Shares outstanding on the record date for such dividend and the denominator is four times the original number of Class VBN Shares issued (taking into account the contingently issuable Class VBN Shares referred to in Note 3 beginning on page 72 of this Report), subject to such adjustments to the denominator from time to time as is deemed appropriate by the Board of Directors of the Company, including the issuance of additional Class VBN Shares pursuant to employee stock option plans, the purchase of Class VBN Shares by the Company, and the contribution of cash or property by the Company. This dividend policy does not form part of the attributes of the Class VBN Shares. The Board of Directors has no present intention of changing this dividend policy. However, it has the right to reconsider and change the policy from time to time in light of VBNC's income and capital needs and other factors, including the Company's consolidated financial position.
Liquidation, Dissolution or Winding-up
Subject to the prior rights of the Preferred Shares and any other class or series of shares in the Company's capital stock ranking in priority to the Class VBN Shares, the holders of the Class VBN Shares shall, in the event of a distribution of assets of the Company among its shareholders on a liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, be entitled to receive, in respect of each share so held, a pro-rata amount of such assets of the Company equivalent to the proportion equal to the Class VBN Shares then outstanding divided by the number of Class VBN Shares and Common Shares then outstanding, as if the Common Shares and Class VBN Shares formed one class, without preference or distinction.
Other Distributions
The Company may issue or distribute securities (including rights, options or warrants to acquire such securities and any securities convertible into or exchangeable for such securities) or any other property or assets of any kind (including evidences of indebtedness and any rights, options or warrants to acquire such property or assets), exclusively to holders of the Common Shares by way of a special distribution or otherwise, as the directors of the Company in their discretion may declare without declaring and making a special distribution or other distribution to the holders of the Class VBN Shares.
The Company may issue or distribute securities (including rights, options or warrants to acquire such securities and any securities convertible into or exchangeable for such securities) or any other property or assets of any kind (including evidences of indebtedness and any rights, options or warrants to acquire such property or assets), exclusively to holders of the Class VBN Shares by way of a special distribution or otherwise, as the directors of the Company in their discretion may declare without declaring and making a special distribution or other distribution to the holders of the Common Shares.
Conversion of Class VBN Shares
The Class VBN Shares are convertible by the Company, at any time after August 21, 2006 or in the event of the sale of all or substantially all of VBNC’s assets or in the event that the Company holds less than 50.1% of VBNC’s outstanding common shares, into Common Shares of the Company on the basis of dividing the then current market price (based upon a weighted average 20-day trading price formula) of one Class VBN Share by the then current market price (based upon a weighted average 20-day trading price formula) of one Common Share and multiplying that amount by a factor of 1.2.
The Class VBN Shares are also convertible, at the holder’s option, in the event of the sale of all or substantially all of VBNC’s assets or in the event the Company holds less than 76% of the outstanding shares of VBNC.
Take-over Bid Coat-Tail Rights
The holders of Class VBN Shares are entitled to participate in any offer to purchase Common Shares by a person other than the Company which must, by reason of applicable securities laws or stock exchange rules, be made to all or substantially all of the holders of Common Shares and which is not made concurrently to the Class VBN Shareholders, at a price at least representing the same percentage premium to the current market price of the Class VBN Shares as was offered to the Common Shareholders.
While the Class VBN Shares contain coat-tail provisions which enable the holders of Class VBN Shares to participate in a non-exempt take-over bid made for the Common Shares, no such provisions apply for an issuer bid. Accordingly, the Company is permitted to make a normal course or substantial issuer bid for the Common Shares without making an equivalent offer to the holders of the Class VBN Shares.
------------------------------------------------------------------------------------------------
Note 14. Class VBN shares
On August 21, 1996, the Company issued 25,892,469 Class VBN Shares valued at $753 million as partial consideration for the acquisition of Diamond Fields. The Class VBN Shares issued represent a new class of equity shares which are intended to provide an interest, aggregating approximately 25 per cent, in the financial performance of the Voisey’s Bay project and all future discoveries in Labrador with respect to which VBNC, formerly a 75 per cent-owned subsidiary of Diamond Fields and now a wholly-owned subsidiary of the Company, has the right to explore and develop, as well as in existing exploration properties in Norway and Greenland which were held by Diamond Fields as of August 21, 1996. Accordingly, the Class VBN Shares provide holders with a financial return based on the performance of VBNC and not any other subsidiaries, divisions or operations of the Company. Holders of Class VBN Shares have no direct rights in the equity or assets of VBNC or the Company, except on a liquidation, dissolution or winding-up of the Company where, subject to prior rights of the Preferred Shares and any other prior ranking shares, the holders of the Class VBN Shares would be entitled to receive, on a pro-rata basis, the proportion of the assets remaining available for distribution to shareholders equivalent to the number of votes attaching to the Class VBN Shares divided by the total votes attaching to both the Common Shares and Class VBN Shares in total then outstanding. The Class VBN Shares have certain general and other voting rights and rights to convert into Common Shares of the Company upon certain stated events as summarized below.
Subject to any preference as to dividends provided to the Preferred Shares and any other prior ranking shares, the holders of the Class VBN Shares are entitled to dividends as and when declared by the Company’s Board of Directors. The Board of Directors, in its sole discretion, may declare dividends in respect of the Class VBN Shares without declaring dividends in respect of the Common Shares and vice-versa. If the Board of Directors declares dividends in respect of both the Common Shares and Class VBN Shares, the Directors may, in their sole discretion, declare dividends payable in respect of each such class in equal or unequal amounts and at the same time or at different times, provided that any and all dividends declared on the Common Shares and Class VBN Shares shall rank equally as to the entitlement to receive payment of any such dividends so declared, without preference or distinction. However, until August 21, 2006, to the extent that dividends which are declared and paid in accordance with the Company’s dividend policy with respect to the Class VBN Shares do not provide the holders with dividends on a per share basis of at least 0.8 times, subject to certain adjustments, the per share regular cash dividends declared and paid on the Common Shares in any year, dividends shall be declared in respect of the Class VBN Shares in a per share amount of not less than 0.8 times the per share amount of the regular cash dividends declared in respect of the Common Shares for such year. This entitlement does not extend to any special dividends or non-cash dividends declared on the Common Shares.
The intention of the dividend policy of the Class VBN Shares is for the Board of Directors to declare, on a quarterly basis in arrears, non-cumulative cash dividends on the Class VBN Shares equal to the Adjusted Net Income (as defined) of VBNC multiplied by an Ownership Factor (as defined). The Adjusted Net Income of VBNC is determined quarterly and will generally be equal to the separate net income or loss of VBNC adding back non-cash charges, including the effects of purchase accounting resulting from the Company’s acquisition of Diamond Fields, less the sum of (a) projected principal debt payments and capital expenditures of VBNC for the next succeeding quarter after the quarter in respect of which the particular dividend is being calculated, and (b) cash to be retained as reserves to cover any liabilities for which adequate reserves have not already been established. The Ownership Factor is the fraction where the numerator is the Class VBN Shares outstanding on the record date for such dividend and the denominator is four times the original number of Class VBN Shares issued (taking into account the contingently issuable Class VBN Shares referred to in Note 3), subject to such adjustments to the denominator from time to time as deemed appropriate by the Board of Directors of the Company, including the issuance of additional Class VBN Shares pursuant to employee stock option plans, the purchase of Class VBN Shares by the Company, and the contribution of cash or property by the Company.
The Class VBN Shares are convertible by the Company, at any time after 2006 or in the event of the sale of all or substantially all of VBNC’s assets or more than 50 per cent of VBNC’s common shares, into Common Shares of the Company on the basis of dividing the then current market price (based upon a weighted average 20-day trading price formula) of one Class VBN Share by the then current market price (based upon a weighted average 20-day trading price formula) of one Common Share and multiplying that amount by a factor of 1.2. The Class VBN Shares are also convertible, at the holder’s option, on the same basis as the Company’s optional conversion right into Common Shares of the Company in the event of sale, by the Company, of more than 24 per cent of the shares of VBNC. Holders also have the right to convert, subject to specified terms and conditions, in the event of certain offers by third parties to acquire Common Shares of the Company. The Class VBN Shares, together with the Common Shares and the Preferred Shares Series E, carry general voting rights and holders of Class VBN Shares are entitled, subject to adjustment in certain events, to one vote per share on all matters submitted for a vote. The Class VBN Shares also have a right, as a separate class, to elect two directors to the Company’s Board of Directors and certain other class voting rights in the event of certain fundamental corporate changes. Changes in the Class VBN Shares for 1996 are shown below. |
