Falconbridge consults rules in bid to halt Noranda Inc.

It may be merely a temporary snag, but the Ontario Securities Commission is delaying Noranda Inc.’s (TSE) recent bid to buy seven million Falconbridge Ltd. (TSE) shares at $22.25.

Following a request by Falconbridge chairman Bill James, the OSC is considering whether some of the 14.8 million Falconbridge shares now held by Noranda were acquired by unsolicited normal course trades.

If Noranda’s bid for seven million Falconbridge shares is successful, it would raise its stake to 29.4% from 19.9% of the nickel miner’s outstanding shares.

“The OSC is really trying to find out if someone went out and sold the Falconbridge stock at a level higher than the market price before running it (the market price) up,” said Bruce Bone, Noranda’s vice- president and treasurer.

Some of the 14.8 million shares now owned by Noranda were acquired by block trades but they weren’t pre-arranged transactions, said Bone. “We didn’t know who the sellers were on any of the transactions.”

Noranda agents Gordon Capital Corp. and Burns Fry Ltd. have already told the company that the block trading activity followed normal market practices.

But if OSC regulators decide that the purchases were not unsolicited normal course trades, the pre-bid integration provisions of the Ontario Securities Act would prohibit Noranda from making an offer for less than all of Falconbridge’s outstanding common shares.

“As far as we’re concerned, this is a technicality and we expect the OSC to rule that they were normal course bids,” said Bone.

“Otherwise it becomes difficult for a company to deal with a broker on that type of transaction.”