Tell me if any somebody knows something about the intention of this strange looking transaction. The following news dates of Thu, 23 Apr 1998:
L. James Porter, Chief Financial Officer, Hariston Corporation ("Hariston") announced the following:
Hariston has received a request dated April 20, 1998 from Cross Creek Finance Group Ltd. ("Cross Creek") requesting that Hariston convene a meeting of its shareholders. Cross Creek's parent corporation, Pacific Mercantile Company Limited ("Pacific Mercantile") announced the delivery of this request in a press release issued on April 20, 1998.
Neither Cross Creek nor Pacific Mercantile are registered as shareholders of Hariston and accordingly Cross Creek does not have the ability at law to request that a meeting of Hariston's shareholders be convened. Hariston has communicated these facts to Pacific Mercantile and will, in accordance with applicable regulatory requirements, make further announcements regarding corporate developments when appropriate.
Pacific Mercantile's press release also suggested that Hariston Corporation does not intend to hold its 1997 annual general meeting in accordance with the requirements of applicable corporate legislation.
Hariston's 1997 annual general meeting will be held in full accordance with such laws, as was Hariston's 1996 annual general meeting.
Hariston's Board is aware that Pacific Mercantile is attempting to solicit support from among Hariston's shareholders. Pacific Mercantile is a public company traded on the Alberta Stock Exchange under the symbol "PMF". Pacific Mercantile is a company with minimal apparent activities and its shares last traded on December 22, 1997 at Cdn$0.90, their 52 week low.
Its wholly-owned subsidiary Cross Creek is inactive. Pacific Mercantile's latest publicly available balance sheet, dated December 31, 1996, shows assets of less than Cdn$1.5 million. Pacific Mercantile is controlled by brothers Tom and Tian Kusumoto through a 48% shareholding in Pacific Mercantile by Nirvana Capital Ltd., a private holding company owned by the Kusumoto family.
Hariston's Board members have spoken with Tom Kusumoto on numerous
occasions over the past four months but during this time Mr. Kusumoto has not proposed any business plan or acquisition for the Board to consider.
Mr. Kusumoto did propose by letter dated February 26, 1998 that Pacific Mercantile subscribe for Hariston shares to be issued from treasury in a private placement. The Board rejected this proposal due primarily to the proposed subscription price being well below an acceptable level. Mr. Kusumoto was invited to make an improved offer to the Board but has not done so. More recently, by letter dated April 2, 1998 Mr. Kusumoto requested that the Board grant two Board seats to representatives of Pacific Mercantile (such representatives understood to be Tom and Tian Kusumoto). The Board rejected this request based primarily on the fact that Mr. Kusumoto has not demonstrated that he has a plan to put before the Board, nor has he demonstrated that he or Tian Kusumoto represent the best interests of Hariston's shareholders at large.
In a Schedule 13D filing made with the U.S. Securities and Exchange
Commission on March 16, 1998, Pacific Mercantile reported that its
subsidiary Cross Creek had acquired 696,000 Hariston shares on March 5, 1998 from JB Oxford & Company and Oeri Finance Inc. Per the Schedule 13D, these purchases were effected in an off-market transaction that involves call and put options. Due to the existence of these options, the Board believes that it is highly probable that in the period March 6, 1999 to April 6, 1999 ownership of the 696,000 shares will revert back to JB Oxford & Company and Oeri Finance Inc. Since the nature of Cross Creek's shareholding in Hariston would thus appear to be short-term, the Board questions the commitment of Messrs. Kusumoto to ensuring the long-term health and viability of Hariston.
In conclusion, the Board wishes to advise the shareholders of Hariston to independently evaluate Pacific Mercantile and Messrs. Kusumoto prior to supporting their efforts. Hariston's Board would also like to take this opportunity to assure shareholders that it is working diligently and persistently to pursue and conclude arrangements that are beneficial for the Company and its shareholders.
Incorporated in 1952, Hariston is a Canadian public company whose shares trade on the OTC Bulletin Board in the United States under the symbol "HRSNF".
TEL: (604) 685-8514 L. James Porter, Chief Financial Officer |
