The OSC and BCSC recently held a simultaneous hearing to consider issues arising from a hostile takeover bid which were the first under the new takeover bid rules that were released last spring. The case involved an insider bid by Hecla Mining Company (“Hecla”), a senior silver miner and the largest shareholder of Dolly Varden Silver Corporation (“Dolly Varden”), a junior miner, for all the shares of Dolly Varden it did not yet own. Hecla owns almost 20% of the shares of Dolly Varden.
In a simultaneous hearing by videoconference in Toronto and Vancouver, the securities commissions were asked to decide two applications. The first was an application by Hecla to cease-trade a private placement by Dolly Varden intended to pay off debt and fund Dolly Varden’s exploration activities in the coming months, which was announced on July 4. Hecla claimed this was an improper defensive tactic on the part of the Dolly Varden board.
The second was an application by Dolly Varden to cease-trade a takeover bid by Hecla announced on July 8 (though Hecla announced its intention to launch the bid on June 27, after learning of the impending private placement). Dolly Varden claimed the bid circular was deficient because it did not contain a formal valuation, as required for insider bids by MI 61-101, and it also did not contain material information concerning Hecla’s recent purchase of silver claims adjacent to Dolly Varden’s claims.
The OSC allowed Dolly Varden’s application and cease-traded the Hecla bid. Both the OSC and BCSC dismissed Hecla’s application to cease trade the private placement offernig. Neither securities commission has issued reasons for its decision yet.