Only days before shareholders were scheduled to vote on a proposed 3-way merger, two of the companies involved,
TVX announced that a group of investors known as the Alpha Group was seeking a temporary injunction requiring the company to disclose the allocation of its assets after the proposed merger. The group also asked the courts for permission to amend its claim to seek a temporary injunction prohibiting TVX from completing the merger until Alpha has had a chance to exercise its right of first refusal on TVX’s Greek assets.
In a prepared statement, TVX said: “The Alpha Group has alleged that it has a right of first refusal over TVX’s Greek assets and that the right is triggered by the proposed business combination. TVX disputes that there is any right of first refusal and that any such purported right is triggered by the business combination.”
A day after Alpha’s motion was filed, TVX announced that the Ontario Superior Court of Justice had ruled that the company’s proposed three-way merger did not trigger any purported rights of first refusal by Alpha. Alpha then withdrew its motion for any injunctive relief.
Alpha’s latest motion is one in a long series of disputes between the two companies. In June 2000, the Court of Appeal for Ontario upheld a lower court decision that granted Alpha a 12% carried interest and the right to a 12% participating interest in the Kassandra property in Greece. The Court ruled that TVX had used confidential information owned by Alpha in winning a tender process for the property in 1995.
TVX was recently forced to declare force majeure on deliveries from its Stratoni base metal mine after the Greek government ordered a temporary halt to mining while various agencies examine permitting studies for an expansion at the mine.
Meanwhile in Russia, Kinross is facing a delay in its plan to buy out the Russian shareholders of its 54.7%-owned subsidiary, Omolon Gold Mining.
Late last year, Omolon arranged to buy back the outstanding shares for US$45.4 million. The deal came amid lawsuits launched by three of Omolon’s Russian shareholders claiming their shares were flawed as a result of “registration deficiencies.” The shareholders were looking for a return of their original investment plus interest.
Earlier this year, the suits were dismissed with prejudice. An order freezing certain of Omolon’s assets was also quashed.
In order for it to go through, the share-purchase deal still needs certain written assurances from the Magadan Administration. However, Kinross says the acting governor seems unwilling to sign any documentation clearing the deal until after an election in early February.
The company expects the deal to be wrapped up by the end of the first quarter. It was originally expected to close in mid-November 2002.
Kinross shareholders approved their company’s proposed 3-way deal on Jan. 28. At presstime, TVX and
If approved by shareholders, and then the Ontario Superior Court, the merger would create the world’s seventh-largest gold producer.
Despite the disputes, all three companies have been trading at, or near, multi-year highs over the past two months as gold prices hit 6-year highs: Kinross, the most active stock of the three, last traded at $3.67; TVX traded at $23.86; and Echo Bay rang in at $1.91.
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