Letters to the Editor Bad deal for minority shareholder

I would like to bring to your attention a most unjust situation which I recently encountered as a small investor, confronted with a forced share sale.

A large foreign company, Western Mining Corp. Holdings, of Australia, through subsidiary WMC Acquisition Corp., struck a deal with Northgate Exploration of Toronto to acquire Northgate’s interest in a small exploration company, Norbeau Mines, of which I am a minority shareholder.

Subsequent to acquiring Northgate’s shares, WMC tendered an offer for the remaining outstanding shares of Norbeau at the prevailing market price (which was low due to the market crash of Oct 19, and its resulting impact on small exploration companies such as Norbeau).

As the price offered by WMC was well below the cost of the Norbeau shares held by me, I declined their offer.

Unfortunately, WMC acquired enough of the outstanding shares to have the stock delisted, thus leaving me with no one to sell my stock to but WMC, at a loss. Upon contacting the Ontario Securities Commission (OSC) as to my rights as a minority shareholder in a forced takeover, I was informed that Section 187 of the Ontario Business Corporations Act (similar provisions exist in the Canada Business Corporations Act) can force me to sell my shares, since WMC acquired over 90% of my stock. Further, the OSC could do nothing to safeguard my interest and ensure that a loss was not forced on me.

As a small investor, I find it deplorable that two large corporations can unite to force a minority shareholder to sell against his will.

The former owner, Northgate, gave no indication of its intention to sell Norbeau at the annual shareholders meeting but rather provided reassurance of its continued commitment to exploration by Norbeau. Optimistic reports of previous exploration programs provided by the project engineer served to convince me that Norbeau was a valuable investment in the near future. This made the forced sale a surrender of any future gains as well.

I sincerely hope this letter will serve to educate other small investors by making them aware of the inequities that exist for big corporations in various provincial and federal statutes and that any venture into the market should be done with caution. Fairness is only a perception, rather than reality. James D. Williams, CA Scarborough, Ont.