METAL MARKETS Shareholders nix amalgamation plan

Preferred shareholders of Potash Co. of America recently rejected a proposal to amalgamate the company with Rio Algom, which controls almost 88% (all of the common shares) of the company. Potash Co., reeling from depressed prices for potash, lost an estimated $13.1 million during the first six months of 1987. The company’s loss in 1986 amounted to $3.6 million. The preferred shareholders were offered $13 per share; the preferred shares have a par value of $25 each.

The company reports that half of the 1.2 million outstanding preferred shares were represented at the meeting. Two-thirds of the preferred shareholders had to vote in favor of the amalgamation for it to go ahead.

Potash Co. has two potash mines: at Saskatoon, Sask., underground flooding has closed the mine operation; at Sussex, N.B., the company has had to correct design problems and now has it operating near capacity.

Had Rio Algom succeeded with the amalgamation proposal, it would have stood to gain from the tax credits available to Potash Co.; the latter, because it is losing money, is unable to touch the tax credits, whereas the money-making Rio Algom would stand to benefit.