Corona ponders legal action in fight over Dickenson

Corona Corp. (TSE), which is bidding against gold fund Goldcorp Investments Ltd. for control of Dickenson and Kam-Kotia, says it has received legal advice regarding its rival’s offers “which raises significant issues as to the legality and viability of the offers.”

Corona, which first set a deadline of March 7 and then extended it to March 21, now says its offers to Dickenson and Kam-Kotia shareholders will be in effect until April 4.

The Goldcorp offers will stand until April 14.

“In addition,” Corona continues in a prepared release, “Corona is of the view the inducements to Goldcorp by Dickenson and Kam-Kotia to make the offers and the potential payments to management of Dickenson and Kam-Kotia constitute a wasteful and unwarranted use of corporate assets of Dickenson and Kam-Kotia and raise significant issues about the discharge of fiduciary duties by the boards of directors of Dickenson and Kam- Kotia.”

Corona is offering $7.15 for each Dickenson B share and $2.50 for each Kam-Kotia common share, and has indicated its intention to make an offer of similar value ($7.15 or a price equivalent) for the Dickenson A shares. (The B shares carry 10 votes each and the A shares, one vote each.)

Goldcorp is offering $9 for each B share, $3 for each Kam-Kotia share and $8.50 for each A share up to 50% of the outstanding A shares.

The Goldcorp deal would see Goldcorp gain control of both companies by acquiring 51.8% of the Dickenson B shares and 50.04% of the Kam-Kotia shares, with current management staying on. The deal in part includes compensation for Goldcorp should higher bids be received and also a $1.75-million payment for expenses in preparing its offers.

Directors of both Dickenson and Kam-Kotia, which have interlocking ownership, have signalled their acceptance of the Goldcorp offers. (Dickenson has a 39.7% in Kam- Kotia, while Kam-Kotia has a 39% voting interest in Dickenson.) Corona, which purchased shares in both Dickenson and Kam-Kotia prior to announcing its takeover bid, now says its has acquired (through a subsidiary) about 1.3 million shares, or a 7.6% interest, in Wharf Resources (TSE), a gold producer in the United States which is 34.7% controlled by Dickenson. (Wharf has a 7.6% interest in Kam-Kotia.)

On the legal front, CSA Management Ltd., which manages Goldcorp, has already filed a lawsuit in the Supreme Court of Ontario over blocks of shares in Dickenson and Kam-Kotia held by Pamour Inc. (TSE). CSA claims it has an agreement with Pamour to purchase the shares.

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