Management of Placer Dome (TSE) is offering minority shareholders of Equity Silver Mines (TSE) 70 cents each for all the shares Placer does not already own.
Placer already holds 58.8% of Equity’s outstanding shares, and the offer is conditional on at least 90% of the minority-held shares being tendered. Equity’s major asset, the Equity silver mine near Houston, B.C., shipped the last of its concentrate in the third quarter of 1994.
The company is now essentially a shell, with 32.5 million shares outstanding and $29 million in working capital (as of Sept. 30, 1994) plus a reclamation liability tied to the closed mine.
Some of the waste dumps at the Equity mine generate acidic runoff and, as a result, must be monitored and the water treated. On top of its working capital, Equity has a $36-million bond in place to cover the cost of water treatment for as long as the site generates acid.
Recent changes to tax laws have brought into question whether the bond is sufficient to generate enough after-tax income to cover treatment costs. By making Equity a wholly owned subsidiary, Placer hopes to save the costs related to maintaining a separate public company, as well as utilize certain tax rules which would not be available to Equity as a non-operating company.
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