Competing takeover bid for Vestgron Mines shares

The halt in trading in shares of Vestgron Mines on the Toronto Stock Exchange was still in effect at press time while the company deals with what appears to be a bidding war.

A competing takeover bid was made for all of the outstanding shares of Vestgron on Oct 17 by a wholly-owned subsidiary of CanEast Capital, a private investment holding company based in Halifax, N.S.

The new bid at 65 cents per share competes directly with the 50 cents -per- share bid made by Toronto-based Zenmac Zinc late last month. (N.M., Oct 13/86).

There are 4,227,968 common shares outstanding of Vestgron. Cominco Ltd. holds 62.5% or 2,642,618 shares. At 65 cents per share takeover bid would amount to $2.74 million.

In an agreement reached late last month, Cominco agreed to tender all its shares in response to the Zenmac bid. However, Cominco reserved the right to withdraw its tendered shares if a higher offer was made.

Ralph Davis, a Cominco solicitor, tells The Northern Miner, Cominco is now waiting to see whether Zenmac will revise its bid to meet the 65 cents price before deciding whether to tender its shares in Vestgron in acceptance of the CanEast bid.

Zenmac Zinc could not be reached for comment.

Zenmac’s original bid of 50 cents per share expired at the end of business Oct 17. Trading in Vestgron was halted at 75 cents on the TSE just after 3 p.m. that day for disclosure of the bid from CanEast.

At year-end Dec 31, Vestgron posted a net loss of $29.6 million or $7.01 per share compared to net earnings of $4.2 million or $1 per share in the year-earlier period. Its working capital position stood at $2.3 million at the end of 1985 versus $14 million at the end of 1984.

Earlier this summer Vestgron sold its 100% interest in Greenex A/S to Boliden AB. Greenex was the operator of the Black Angel zinc-lead mine near Maarmorilik, Greenland which ceased operations on June 1 because of weak metal prices.

Vestgron received about $825,000 at the time of closing the sale of Greenex and will receive a future payment if enough proceeds are realized on the sale of Greenex’s June 1 inventory of zinc concentrate.