Royex makes offer to boost interest in Int’l Corona

In a move that is designed to put Murray Pezim out of the picture, Royex Gold Mining has announced an offer worth potentially $230 million to boost its ownership in International Corona Resources to approximately 50%.

The offer, announced by Royex Chairman Ned Goodman, is for 4 million Corona common shares and approximately 750,000 $9.50 Corona share purchase warrants expiring Aug 31 of this year. Royex has valued the offer at in excess of $50 per share and $40 per warrant. The offer, unless extended, will expire April 22.

Mr Pezim, a former vice- chairman of Corona and currently chairman of Galveston Resources of Vancouver, is involved in a lawsuit, along with Galveston, against Corona. Mr Pezim and Galveston are seeking to have five Corona directors removed and two of Mr Pezim’s associates appointed, Corona’s purchase of a control block of shares in Lacana Mining reversed, and management prohibited from voting Corona shares held by subsidiaries.

The purchase price for each Corona share consists of one Royex convertible retractable zero coupon series “B” first preference share (nominal value $20), one Royex convertible 6.5% series “C” first preference share (nominal value $20), one 5-year $7.50 Royex share purchase warrant, and $4 in cash.

The purchase price for each Corona warrant consists of 1.75 convertible retractable zero coupon series “B” first preference share (nominal value $35) and one 5-year $7.50 Royex share purchase warrant.

Both series of preference shares will be convertible into Royex common shares, initially on a basis of 3.33 common shares for each preference share converted. This conversion basis will have a one-time adjustment based upon the trading price of Royex common shares at a date after the litigation between Corona and Lac Minerals is resolved, but not later than April 30, 1990.

(Corona challenged Lac’s ownership of the Page-Williams gold mine at Hemlo in northern Ontario and won the initial court case. Lac appealed the ruling but there has been no decision announced by the Ontario Court of Appeal on the appeal heard last November.)

The adjustment will be 3.33 Royex common shares if the market price is $6 or more, 3.83 shares if the price is $5.50 to $6, 4.33 shares if the price is $5 to $5.50, and 4.83 shares if the price is less than $5. The adjustment will be based upon the weighted average trading price of Royex common shares during a period of 60 trading days. (Corona shares have been trading in the $40 range; Royex shares are currently priced in the $6 range.)

The series “B” preference shares carry no dividend, will have a one- time retraction at $20 per share on April 30, 1992, and, if not retracted, will automatically be converted into series “C” preference shares.

The series”C” preference shares will be entitled to fixed cumulative dividends, payable quarterly at the annual rate of $1.30 per share. They will be redeemable after April 30, 1992, at $20 per share, plus accrued and unpaid dividends, if the Royex common shares are trading at a 125% premium to the conversion price.

Royex’s current interest in Corona is 38%, while Corona at present owns 49% of Royex.

The Royex offer is not conditional on any minimun acceptance level. However, if less than 2.7 million Corona shares are tendered, shareholders depositing Corona shares or warrants will be allowed to withdraw during the two business days immediately following termination of the offer. If more than four million shares are deposited, Royex will pay for such shares on a pro rata basis.

Managing a Canadian soliciting dealer group is First Marathon Securities Ltd. of Toronto. In charge of an international soliciting dealer group is Alexanders, Laing and Cruickshank of London, England.