Teddy Bear shuffle is ruled `improper and invalid’ by court

A judge for the Ontario Court of Justice has ruled that the 1984 transfer of at least 1.23 million shares of Teddy Bear Valley Mines (CDN) from the Teddy Bear Valley Syndicate to former chairman Ross Hofmann was “improper and invalid.”

The order is an initial victory for the 67-year-old syndicate and for Paul Zyla, a former director of the company, who filed an application regarding the misplaced shares in June, 1991. Teddy Bear followed Zyla’s move by filing its own application to have the share reorganization reversed. In the meantime, Hofmann resigned as chairman of the company.

“For the first time since 1984 it quantifies an asset that the syndicate owns,” Zyla said when he received a hand-written notice of Judge Stephen Borins’ conclusions following initial proceedings on July 3. If the syndicate members or their heirs are reimbursed for the share loss, they could end up owning a big stake in Teddy Bear, which in turn has a significant interest in the Holloway gold project near Matheson, Ont.

Holloway is estimated by operator Hemlo Gold Mines (TSE) to contain reserves of 5.5 million tons grading 0.27 oz. per ton and is expected to enter production in 1994 or 1995. Negotiations to encompass the deposit in a single mine property are under way.

Judge Borins also ordered that the exact number of shares transferred during the reorganization be determined at a combined hearing of both applications. Until the hearing, or further order of the court, Hofmann and his agents, heirs, and assigns have been prohibited from the sale, transfer or assignment of any of their Teddy Bear shares.