Faced with a lawsuit related to involvement in a proposed merger between Canarc Resource (VSE) and Rembrandt Gold Mines (ASE), certain directors of Canarc as well as certain investors and Canarc itself have filed a statement of defence.
The original lawsuit, brought about by International Precious Metals (IPM), alleges the group acted improperly in the 1992 attempt to merge Rembrandt with Canarc.
IPM is seeking to have cancelled a 1.5-million-unit private placement in Rembrandt (done in early 1992). It is also claiming undisclosed damages against the defendants.
Rembrandt did receive shareholder approval for the private placement, although IPM did not vote its 34% interest, claiming it did not receive notice of the meeting.
The defendants said the placement funds were needed to meet a tax liability and added that the investors, including two individuals and two institutions, were at arm’s length from members of Rembrandt’s board, as well as from Canarc.
Regarding IPM’s attempt to have the private placement cancelled, the defendants argue that it would be impossible, since, in addition to having a legal right to the units, the purchasers no longer own them and it is not possible to return to the status quo.
Those shareholders of Rembrandt who accepted the Canarc offer went from owning one share worth about 30 cents (at the time) to owning 0.28 of a share now worth about $5. This represents a 4.7-fold increase.
In comparison, those shareholders who did not accept the offer (including IPM) hold stock worth about 45 cents.
Rembrandt, which has 5.9 million shares outstanding, owns the Polaris-Taku property in northwestern British Columbia. The deposit contains an estimated underground resource of 2.9 million tons grading 0.43 oz. gold per ton. Rembrandt is 58%-owned by Canarc and 21%-owned by IPM.
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