Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Peruvian Gold Ltd. PVO -- Ignore unavailable to you. Want to Upgrade?

To: Robert Dydo who wrote (518)	4/7/1998 2:46:00 PM
From: Matt Cecile	Read Replies (2) \| Respond to of 892

Seems Bradstone is going to stir things up a bit... Peruvian Gold to acquire Gabriel Resources' shares Peruvian Gold Limited PVO Shares issued 14,227,466 Apr 6 close $0.75 Tue 7 Apr 98 News Release Also Gabriel Resources Ltd (GBU) Mr Robert Atkinson of Blackstone Equity Partners reports Bradstone Equity Partners holds a total of 2,634,500 common shares of Peruvian Gold Limited representing approximately 18.42% of the issued common shares of Peruvian. Peruvian and Gabriel Resources have entered into an agreement under which Peruvian has agreed to make an offer to acquire all Gabriel's outstanding shares in exchange for common shares of Peruvian on the basis of 1.4 Peruvian shares for each one Gabriel. The joint announcement states that the board of directors of Gabriel has agreed to recommend the offer to its shareholders, that Peruvian and Gabriel have agreed not to solicit often from others regarding mergers or other such transactions during the term of the offer, that both companies are entitled to a $1,000,000 break-up fee if the other company fails to perform its obligations under the merger agreement and that certain shareholders of Gabriel holding approximately 60% of the issued shares of Gabriel have agreed to tend to the offer under the terms of a lock-up agreement. If Peruvian acquires all of the shares of Gabriel under the merger agreement, Peruvian shareholders will have their share interests substantially diluted as Peruvian will be obligated to issue to Gabriel shareholders in excess of 200% of the issued capital of Peruvian and have their company through its then subsidiary, Gabriel, involved in their projects in Romania and Bulgaria without Peruvian shareholders having any right to approve the merger transaction or any rights of appraisal or dissent if they are opposed to the transaction. Bradstone does not have any participation on the board of directors of Peruvian despite its request for board representation. Bradstone with its holdings of approximately 18.42% of the issued shares of Peruvian, and certain other shareholders of Peruvian holding an additional at least 16% of the issued shares of Peruvian who have contacted Bradstone, believe that, as the shareholders of Gabriel are being given full disclosure as to Peruvian and its assets and the right to accept the offer, the shareholders of Peruvian should likewise be entitled to full disclosure as to Gabriel and its assets and have the right to approve the transaction contemplated by the merger agreement. Management of Peruvian has refused Bradstone's request to call a Peruvian shareholder meeting to approve the merger transaction. Bradstone believes that management of Peruvian has a legal and ethical obligation to shareholders of Peruvian to afford them the fundamental right to approve this transaction for the following reasons; 1. The transaction contemplated by the merger agreement, although is outlined in the news release as a share exchange takeover bid, is in effect a merger of the two companies. A merger transaction would typically require approval of shareholders of both companies, especially as in this case one that involves such a substantial reorganization of the companies. 2. Shareholder approval of the transaction will require Peruvian and Gabriel to provide prospectus-level disclosure for not only the Gabriel shareholders but also the Peruvian shareholders as well as providing for disclosure of valuation and/or fairness opinions supporting the merger transaction, inclusion of financial information and other matters necessary to permit shareholders to make a reasoned judgment as to the merger transaction. 3. As far as Peruvian is concerned, the transaction effectively results in Peruvian disposing of substantially the whole of its undertaking (resulting from the entirely new focus of the efforts and expenditures of Peruvian) which under the Company Act (BC) requires shareholder approval by way of special resolution. 4. As a result of the transaction based on the information available to Bradstone, Albion Holdings, a company controlled by V. Frank Timis, chairman of the board of Gabriel will hold in excess of 30% of the issued and outstanding shares of Peruvian which would result in an effective change of control of Peruvian without approval of Peruvian shareholders. Bradstone knows of no reason why the merger transaction has to be completed prior to providing the Peruvian shareholders with an opportunity to vote other than the requirement to pay the $1,000,000 break-up fee if Peruvian fails to complete its obligations under the merger agreement which Bradstone intends to deal with as set out below. Accordingly, Bradstone intends to take all steps to require a shareholders' meeting to approve the transaction. Bradstone has requisitioned a general meeting of shareholders under the provisions of the Company Act (BC). Bradstone has requested that the VSE require Peruvian to seek shareholder approval for the transaction in accordance with its policies. Bradstone is not requesting that the transaction be set aside at this time but wishes to ensure that the shareholders of Peruvian are given the right to receive full disclosure and the right to vote on the transaction, especially in circumstances where the proposed transaction will result in substantial dilution to the Peruvian shareholders, a substantial change in, and disposition of, the undertaking of Peruvian as described above and the potential, as the result of the substantial issuance of shares, for some members of current management (which currently holds 2.67% of the issued shares of Peruvian) to be ensconced in the management of Peruvian upon completion without any opportunity for the current shareholders of Peruvian to vote on the transaction. Management and directors of Peruvian have proceeded with a transaction in the face of opposition by the major shareholders in addition to another large group of shareholders. This transaction cannot be justified without Peruvian shareholder approval, particularly, in light of the lack of independent financial advice on the part of Peruvian. Shareholder democracy is a vital ingredient to any major transaction and the company plans to appeal to all regulators and courts to ensure that self-serving transactions are not forced upon shareholders without an opportunity to vote. (c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com