LETTERS TO THE EDITOR — OSC new rules pose dilemma

The Ontario Securities Commission’s proposed new rules for marketing low-cost speculative securities by dealers who are not members of The Toronto Stock Exchange or Investment Dealers Association, I assume, are directed against the Securities Dealers Society of Ontario. I am concerned because this is the only forum left for financing small resource companies. I well recall when it was possible to approach TSE firms to obtain this type of financing, but this is no longer the case.

I am in the middle of restructuring and financing Consolidated Dixie Resources, an Ontario company listed on the Alberta Stock Exchange with more than 4,000 shareholders. It holds 50-100% working interests in 10 capped gas wells in Tennessee and 10 offset locations. Within the past year a utility has extenkded gathering lines and expanded distribution facilities to the point it is now possible to connect at least six of these wells to this outlet, creating a cash flow of $50,000-100,000 monthly, a development I have been anticipating for some years.

I have personally financed this company for the past four years to maintain its wells and leases in good standing, at the same time watching my control diminish with expiration of my preference shares, warrants and options. I was counting on a current financing with a broker-dealer for $250,000 to bring these wells on stream. I have been advised that this is now on hold pending the outcome of this policy. I am not aware of any other sources of risk capital. Failure of raising funds means I will have to sell these leases and wells to settle company debts, forcing it out of existence and wiping out the equity of 4,000 shareholders.

Perhaps M.R. Brown, who wrote the “On the Level” column on “penny dreadfuls” (T.N.M., Sept. 14), should suggest an approach to my dilemma. James McCannell

Port McNicoll, Ont.