Three rivals vie for Nova-Cogesco’s $5-million in cash

Cash-rich Nova-Cogesco Resources (TSE) has become the object of a bidding war between a health care company operating out of Texas, a west coast gold explorer, and a Toronto-based mining company.

Vancouver-based Hughes Lang (VSE) and its subsidiary Orofino Resources (TSE) recently gained a head start on the pack. So far, 1.6 million shares have been tendered under its cash offer for 4.7 million shares at 31 cents per share.

With 15.4 million shares outstanding, the 1.6 million shares would increase the Hughes-Orofino group’s stake in Nova-Cogesco, which holds just over $5 million in its treasury, to 29%.

Their rivals for Nova-Cogesco include Deak Resources (TSE), which has just proposed an amalgamation with the Quebec junior and Sunport Medical Corporation, a health care service company that intends to make a takeover offer for Nova-Cogesco by the end of the month.

Deak, which is involved in a joint venture with Nova-Cogesco on the Arntfield gold property in Beauchastel Twp., Que., has offered its partner’s shareholders an equal number of Deak shares together with redemption rights and gold purchase warrants.

The redemption rights would allow the shareholders to tender 60% of their shares for cancellation at 26 cents per share. The gold purchase warrants, one of which will be issued for every 20 shares of Nova-Cogesco, would reflect a value of 15 cents per Nova-Cogesco share.

“They have the capital, we have the mining properties,” says Douglas Hume, a spokesman for Deak. “It would be a beautiful marriage.”

Hume said that although Deak and Nova-Cogesco have been discussing a merger for some time, the bids by Hughes Lang and Sunport added a sense of urgency to their negotiations.

Under Sunport’s proposed bid, Nova-Cogesco shareholders will be offered one share of Sunport plus 56 cents for four shares of Nova-Cogesco. The offer is equivalent to 39 cents per share at Sunport’s current market price. If Sunport obtains at least 51% of the Quebec company, it will seek majority control of the board of directors. But if less than 51% of the Nova-Cogesco shares are tendered, Sunport says it may withdraw its offer. Through its subsidiary, Medinvest Holdings, Sunport develops, operates and manages outpatient clinics in the United States. The company intends to actively involve Nova-Cogesco in the health care business.