Shareholders approve fundamental changes to Equity Preservation

Shareholders of Equity Preservation Corp. overwhelmingly approved a management proposal to change the closed- end investment firm into an operating exploration company at a special meeting. Legal challenges forced an adjournment of the morning meeting until late afternoon when Equity Preservation emerged as the victor.

Still to be decided by the Supreme Court of British Columbia is the completion of a share exchange agreement and merger with First Exploration Fund 1987 which was voted on Feb 29. If the court sides with Equity Preservation, the company would be merged with Equity Reserve which is owned by First Exploration Fund 1987. Shares would then be distributed to the limited partners of First Exploration Fund 1987 in May.

The merger proposal was narrowly approved (75.96%) at the Feb 29 meeting, but the critical margin was only achieved after proxies sent by facsimile were included. An earlier count, which did not include those proxies, yielded an approval rate of 74.08%, slightly below the 75% margin required. The Supreme Court will have to decide on whether the facsimile proxies are valid.

CSA Management of Toronto attempted to scuttle Equity Preservation’s agenda and, indeed, tried to prevent a quorum by not voting its 7% share holding. But when the final count was in, Robert McEwen, president of CSA, failed to be re-elected to the board and his company’s investment management contract, worth about $500,000 per year, was not renewed. McEwen also objected to a private placement of 690,000 Equity Preservation shares which, he argued, would cause unnecessary dilution of its stock. The placement has been postponed for the moment but Equity Preservation has not ruled out its completion at a later date.

Equity Preservation has been limited to holding a 20% equity interest in any public company but shareholders agreed to remove this restriction; this would allow it to effectively control a public company like Nexus Resource Corp. in which it already holds a large share position.

The merged company would be called First Equity Gold Corp. and the value of its shareholding in various public companies is estimated to be over $50 million.