Asbestos shareholders fight for settlement

A group of minority shareholders of Asbestos Corp. (TSE) has lost the first round in its legal battle against the province of Quebec, but it isn’t giving up the fight.

The crux of the dispute, now being heard by the Ontario Securities Commission (OSC), is whether or not the minority shareholders are entitled to receive the same price for their shares from the Quebec government that the province paid to a U.S. multinational eight years ago. The claim amounts to $170 million, or $150 a share.

The setback for the Committee for the Equal Treatment of Asbestos Minority Shareholders occurred when its lawyer failed to have Quebec turn over a Ministry of Finance document in which the author stated, “drown the fish.” The shareholders’ lawyer claimed this was a reference to the shareholders. The OSC panel ruled that the document was not relevant.

This is just one in a series of setbacks for the minority shareholders which can be traced back to 1981, when Quebec made an offer to take over Asbestos Corp. The government finally gained control of the company and paid General Dynamics $88 a share in 1987. General Dynamics exercised a put option that forced Quebec to buy the 54% interest from General Dynamics. The price of $150 a share being sought by the shareholders comes as a result of compounding interest, which they claim is a valid point since no follow-up offer was ever made for their shares.

The government’s position is that no follow-up offer was required because it had acquired control of a private company that held the shares and because no shares were bought directly.