Queries Some good news in Midepsa query

I am a 20-year suscriber to The Northern Miner. I bought 2,000 shares of Midepsa Industries back in 1967 at $2.20 per share. It came to life about two years ago, then vanished from the Montreal Exchange. I haven’t seen anything mentioned about it in your paper. Can you tell me what has happened to the company. J.S., Bronx, N.Y.

It’s always a pleasure to answer a query like yours and not just because you are a 20-year subscriber. No, the reason is that we’ve got some rather good news for you.

A lot of water has gone under the bridge since you picked up Midepsa Industries back in 1967. At that time the company had a 20% interest in Minera Bayover S.A., a Peruvian company 80% owned by Kaiser Aluminum and Chemical Corp. of California. Midepsa intended through Bayover to develop potash and phosphate deposits in the Sechura Desert of Peru.

But the Peruvian government interfered. First it suggested a partnership of a kind then kept changing its demands until finally it enacted a new law requiring a production schedule with a very short deadline the company would obviously be unable to keep.

By 1971, Kaiser Aluminum decided to throw in the towel, apparently fed up with the Peruvian government’s way of doing business. Kaiser’s decision meant that Midepsa suddenly became the 100% owner of the troubled Peruvian company.

Late that year, Midepsa informed the government of Peru that it was unable to present a calendar of operations as demanded under the newly enacted law and certainly not before the unreasonable deadline and eventually it lost its concession in the Sechura Desert.

In April, 1972, the Peruvian government assigned the Sechura concession to Minero-Peru, the state mining company. That summer, Midepsa was still negotiating with Peru to find a solution and compensation. It presented the government with a claim for $11.45 million for indemnification for its losses.

In 1983 we reported that Midepsa’s claim against the government of Peru for the $11.45 million, plus interest, for wrongful confiscation of phosphate mining concessions in the Sechura desert has been dismissed by the Supreme Court of Peru.

By this time, you are no doubt scratching your head and wondering where the heck that good news we say we have is. Well hold on for a bit longer.

As you write in your letter, Midepsa came to life about two years ago and herein lies the key to this good news of ours.

In 1985 Midepsa Industries shares were exchanged into the Henlys Group Ltd. on the basis of one new share for four old shares.

Henlys Group, is listed on the Montreal Exchange and around press-time it was trading at about the $14 level.

The company’s transfer agent is the Guaranty Trust Co. of Canada in Montreal, Que., located at 2000 Mansfield St.

If you still have your 2,000 Midepsa shares, you should have 500 new Henlys shares coming to you. And at $14 per share, those 500 shares are worth $7,000. Subtracting your original investment of 2,000 Midepsa shares at $2.60 per share ($5,200), you’ve come out $1,800 ahead.

Now, if that’s not good news, we don’t know what is.

In any event, you may be curious about Henlys. It’s a Montreal-based company engaged, through subsidiaries, in the production of automobile safety devices and fire and smoke detection devices. It is also involved in luxury vehicle conversions, plastic and metal packaging, engineering and the manufucture of amusement machines.

In 1985 the company posted a net income of $9.5 million or $2.73 per common share. Revenues that year amounted to $368.8 million.