Corona’s bid `inadequate,’ Dickenson seeks other offers

Both Dickenson and Kam-Kotia report they are encouraging other bids for their shares “but no detailed negotiation is under way.”

Shareholders of both companies have until March 7 to reply to the Corona offers.

The large North American gold producer several weeks ago announced an all-cash bid for the B shares of Dickenson and the common shares of Kam-Kotia. Corona is offering $7.15 for each B share of Dickenson and $2.50 for each Kam- Kotia share.

In making its announcement, Corona reported it had already acquired 1.54 million A shares (15.6% interest) and 11,000 B shares of Dickenson, and 1.3 million shares (10.9% interest) of Kam- Kotia. (Dickenson B shares are worth 10 votes each, and the A shares one vote each.)

Corona’s takeover strategy includes both Dickenson and Kam- Kotia because of the interlocking ownership involved: Dickenson has a 39.7% interest in Kam-Kotia and Kam-Kotia a 16% equity interest (representing a 39.3% voting interest) in Dickenson. Also, a company controlled by Dickenson, Wharf Resources (TSE), has a 7.6% interest in Kam-Kotia. John Kachmar is president of Dickenson, Kam-Kotia and Wharf. Offers `inadequate’

Investment firm RBC Dominion Securities opines the Corona offers are “inadequate, from a financial point of view.” The B shares of Dickenson have been selling on the Toronto Stock Exchange above the $7.15 per share of fered by Corona.

Dickenson, whose main asset is the A.W. White gold mine in the Red Lake area of northwestern Ontario, reported a 1988 net profit of $6.1 million and cash reserves of $11.2 million. The White mine produced 70,200 oz last year and will turn out a projected 82,000 oz in 1989.

“The directors considered the offer, the opinion of RBC Dominion Securities, the company’s results for 1988, their knowledge of the company and other material facts and concluded the offer does not recognize the improvement in the operations at the Red Lake mine or the full value of the company’s other assets,” Dickenson says. (A Kam-Kotia press release contains similar wording.)

Both boards say they are encouraging other offers. “A number of prospective bidders have signed confidentiality agreements and received information about the company which they are currently evaluating,” state the companies.

According to a directors’ circular released by Dickenson, 3-year employment agreements with six of the company’s executives call for termination pay equal to three times annual salary and related benefits in the event of a change of control and change of employment. Also, Kachmar and R. E. Van Tassell, vice-president exploration, would be entitled to additional funds under a company employee benefit plan.

Kam-Kotia’s main asset, in addition to its Dickenson shareholding, is a sodium sulphate operation in Saskatchewan. The company reported net earnings of $2.5 million for 1988.

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