MineAfrica Surviving the Global Financial Crisis in the Mining Sector Understanding the Key Legal and Regulatory Issues in the Current Environment. Presenters: Janne Duncan and Brian Levett Partners, Toronto office February 28, 2009. Agenda. mergers and acquisitions
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MineAfricaSurviving the Global Financial Crisis in the Mining SectorUnderstanding the Key Legal and Regulatory Issues in the Current Environment
Presenters: Janne Duncan and Brian Levett
Partners, Toronto office
February 28, 2009
-metal purchase agreements
Can acquire control without target board of directors'/management consent
May have less access to financial information about target
Second-step transaction may be required if get less than 90%
Take-over bid rules may be onerous eg., collateral benefits, identical consideration etc.
Plans of arrangement
Accommodates complex structures eg., different consideration for classes, tax planning, pre-closing asset sales or reorganizations
Can be assured of 100% if successful with only 66 2/3% approval
May have better access to information about the target
Avoid certain rules on take-over bids eg., collateral benefits
Lose control over timing
Court hearing can give voice to angry stakeholders – BCE vs. Bondholders
– Financial statements of acquiror or merged company
– Fairness opinion
-If payment is in acquiror's stock how do you value the stock in this market?
– More attention to "force majeure"
Hexion Specialty Chemicals (October 2008)
-Expanded MAC provisions to cover economic conditions
-premature disclosure could harm the company
- AiT Advances Information Technologies Corporation (Ontario Securities Commission, October 2007)
-the question of when disclosure is required is not a bright line test and depends on facts and circumstances
- in MD & A context there must be sufficient commitment from both parties that transaction will be entered into and completed
- MD&A - disclosure re operations, capital resources and liquidity risk
- incorporate risk into performance measures
- change to longer-term performance measures
- reduce or eliminate options
- reduce equity component and more deferral requirements
- repricing/repurchase and cancellation of options requires shareholder approval; exchange ratio?
- focus on succession planning
Rio de Janeiro