Delaware to take over Prime Capital

A takeover offer by Delaware Resources Corp. (VSE) for Vancouver-based Prime Capital should put the continuing company firmly in the hands of Corona Corp. (TSE). Prime Capital chairman Murray Pezim contends the deal is virtually a “fait accompli”.

Both Prime and Delaware recently began sharing the same business address and Pezim has moved out of his office in the Stock Exchange Tower which was located 13 floors above the VSE trading floor.

A lot of paper will change hands when and if the deal goes through. Delaware is offering one of its shares for each 1.35 shares of Prime, meaning Delaware would have to issue over 20.1 million shares.

Prime’s present holdings include an approximate 3.8% interest in Delaware, a 58% interest in Colossus Resource Equities (VSE) Delaware’s controlling shareholder, plus 2.2% and 14.7% of the Class A and B shares of Corona Corp. along with 827,000 Corona warrants exercisable in 1990.

In the event the takeover proposal is successful, Delaware will then consider a merger with Colossus on the basis of one share of the amalgamated company for each Delaware share and one share of the amalgamated company for each 1.15 shares of Colossus.

Colossus is a resource investment company whose present holdings include approximately 43.6% of Delaware, 0.32% and 2.2% of the Class A and Class B shares of Corona Corp. and approximately 70,000 Corona warrants exercisable in 1990. The company also holds warrants to purchase three million additional shares of Delaware at $2.33 per share on or before Dec 19. And Colossus has agreed to sell these warrants to Prime for approximately $6.1 million.

Pezim said the deal would take Prime “out of the holding company classification” and give it some actual production. “There was quite a demand for Prime stock (which is private) so this way people will be able to go in and buy it,” he said. He expects the whole deal will be completed by the end of November and the first phase (Delaware/ Prime) by Oct 21.

Prime Capital President John Ivany said Delaware’s name would probably be changed and “Prime would end up carrying on at the end of the day with its own portfolio of securities plus the mine up in northwestern British Columbia.” (The SNIP project is being developed for production by Cominco under a 60/40 joint venture agreement with Delaware in favor of Cominco).

Ivany confirmed that Prime would operate much as it has in the past and he said “this is just an example of the way we hope Prime progresses such that when we do get opportunities like Delaware we have a way of bringing them up into the parent company.”

“That’s a rational way to go at it and I think everybody benefits. For the Delaware shareholder, they spread their asset base and they get to be part of what we hope will be an aggressive growth-oriented company. And from Prime’s viewpoint, it gives us that operating income that we needed to get at some stage.”

Ivany said their would be some dilution of existing shareholders equity and when “all the dust settles” he noted that Corona would end up with marg inally under 15% of Prime. But he added that Corona has expressed an interest in getting that back up to at least 30%, its present holding.