Sherritt Gordon adopting shareholders rights plan

While the company said it isn’t aware of any takeover bid, the plan was announced amid speculation that Trelleborg AB of Sweden has accumulated a 9% stake in Sherritt.

The plan requires any investor accumulating 20% of the 25 million outstanding shares of the fertilizer producer and metal refiner to submit a “permitted bid” for the rest of the company. Should a takeover attempt fail to come under the parameters of a permitted bid, Sherritt Gordon shareholders can then purchase common shares of the company at a 50% discount to the market.

A permitted bid, which may include a cash or securities offer, does not have to be approved by Sherritt Gordon’s board of directors. However, to be considered a permitted bid, it would have to be made to all shareholders and receive 51% approval.

Shareholders are being asked to vote on the plan at the company’s annual meeting, April 19, 1990.

“The board has reviewed its assessment with financial adviser Merrill Lynch Canada and concluded that the adoption of a permitted bid plan will ensure that shareholders will ultimately decide on the investment merits of any takeover bid made to all shareholders for all the outstanding shares of the corporation,” the company said.

To implement the plan, Sherritt is distributing one-share purchase right for each outstanding common share held Nov 23. The rights will not be exercisable and will not trade as separately from the common shares at any time prior to a person or group acquiring, or announcing an intention to acquire (in a manner that does not constitute a permitted bid), 20% or more of the votes attached to all securities of the corporation.

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