U.S. REPORT Galactic-Cornucopia merger in jeopardy

A merger between Galactic Resources (TSE) and Cornucopia Resources (TSE) may not be completed after Galactic failed to meet a condition of the merger agreement.

The boards of the two companies agreed to a merger earlier this year on the basis of Cornucopia shareholders receiving 0.7 shares of Galactic for each share held.

As part of the deal, Cornucopia was required to complete financings totalling US$9.1 million, US$4.5 million of which had to be raised by May 31, 1991.

Galactic had planned to raise part of the funds through a private placement of 7.6 million special units at 80 cents each, but the issue was not completed by the deadline.

The units include one share plus half a warrant. One warrant gives the holder the right to purchase an additional share at $1 for a period of two years after the issue date.

Peter Guest, president of Galactic, does not think the company will have any trouble completing the placement by the end of June, particularly in light of the recent strength in gold markets. Gold recently traded at the US$372 level, an increase of about US$20 per oz. over the past few weeks.

Galactic’s share price has also been on the move. The stock closed up 20 cents at 95 cents for the week ended June 7, giving investors added incentive to buy the issue.

Although Cornucopia can back out of the merger as a result of the missed deadline, the company has deferred its final decision to proceed until June 30.