SEC requirements delay vote on Madeleine reorganization

Shareholders, who were scheduled to vote on a proposed reorganization of Madeleine Mines (TSE) at the company’s annual meeting June 25, will have to wait until management has complied with U.S. securities rules.

Last year, former president Pat Sheridan announced his intention to spin off to shareholders a new company known as Lac des Iles Platinum before Oklahoma oilman George Kaiser bought control of Madeleine from him. The new company is being established to hold Madeleine’s 50% interest in the Lac des Iles platinum project near Thunder Bay, Ont., while Madeleine hangs on to its 25% stake in the San Andres gold mine in Honduras. But Madeleine’s new President Dale McDoulett says the reorganization plan will not be submitted to shareholders until the common shares of Lac des Iles Platinum are registered with the Securities and Exchange Commission in Washington, D.C. He says the company will then be in a position to solicit proxies for the division of Madeleine into two separate units. Under the reorganization plan, Madeleine shareholders will receive one share of Lac des Iles Platinum while retaining one share of Madeleine Mines. “The SEC staff reviewed the reorganization proposal in connection with Madeleine’s foreign issuer registration and concluded that it would constitute an offering of securities in the U.S. and would, therefore, be subject to the registration requirements of the Securities Act of 1933,” said McDoulett. “We had planned to register as a foreign issuer of securities after the proposal was approved.”

By splitting the company in two separate units, management is setting the stage for the acquisition of the platinum project interest it doesn’t already own from The Sheridan Platinum Group, a private company owned 90% by Boston Bay Mines (CDN). Pat Sheridan’s company Belleterre Quebec Mines (CDN) in turn owns 40% of Boston Bay.

If a plan to merge The Sheridan Platinum Group with Lac des Iles Platinum goes ahead, Kaiser’s 32% stake in Madeleine now held by Kaiser-Francis Oil will be diluted down to about 20%. McDoulett said he expects Sheridan to emerge with about 20% of the amalgamated concern.

Future control of Madeleine will be determined by the voting structure of the 9.1 million A shares which carry 1.5 votes each. The B shares carry one vote. Prior to the merger, Sheridan Platinum will set up a new subsidiary with 9.1 million shares and holders of the 60% Boston Bay interest not owned by Belleterre Quebec will have the option to exchange one share of Boston Bay for 4.4 shares of Sheridan Platinum. Those shares will eventually become shares of Lac des Iles Platinum. Under the consolidation, which is expected to be completed by Sept. 30, one Belleterre share can be exchanged for 0.675 shares of Sheridan Platinum.