Scion keeps the heat on Bolivar and Gold Fields

Scion Capital continues in its assault on the Gold Fields (GFI-N, GOF-L) and Bolivar Gold (BGC-T, BGCNF-O) deal.

On Monday, Jan. 9, California-based Scion announced it has asked the Ontario Superior Court to look into Gold Fields recent purchase of roughly 5 million Bolivar shares. Scion believes the purchase should have been subject to stricter rules governing take-over bids.

Scion wants “at the minimum” for Gold Fields to be barred from voting those shares if the Commission rules Gold Fields has acquired them in violation of securities laws. A shareholder vote on Gold Fields’ offer for Bolivar is scheduled for Jan. 12.

In the release Scion says that the voting agreements between Gold Fields and Bolivar’s management entered into as of November 21, 2005, mean that Gold Fields has controlled — and, by Ontario law, been deemed to own — more than 20% of Bolivar’s shares since that date.

Scion argues that any share purchases by Gold Fields since then should have been made in accordance with the take-over bid rules. Rules that regulate how large shareholders may enhance their control of a company.

Scion holds 19.14% of Bolivar shares, and only needs the owners of another 13% of the shares to vote “no” to scuttle the deal. The proposed merger needs approval of roughly 66% of shareholders to go through.

When Gold Fields announced the agreement on Nov. 21, it pointed to a 40% premium over Bolivar’s average trading price for the previous 30 days, and a premium of 18.6% over the closing price on Nov. 18, as enticements to shareholders.

In all, Gold Fields was offering to buy Bolivar’s outstanding securities for US$330 million in cash, or $3.00 a share.

“Had Gold Fields sought to acquire Bolivar by a take-over bid, it would have had to pay market value for Bolivar’s shares, taking into consideration the recent gold rally and clarification of Bolivar’s status in Venezuela,” the release quotes Scion’s president Michael Burry as saying. “Instead, Gold Fields has structured the proposed transaction to effectively cap Bolivar’s share price at $3.00, giving Gold Fields the ability to buy additional shares in the market at prices that do not reflect these positive developments.”