Inco shareholders to vote Dec 9 on recapitalization

The fate of a proposed recapitalization plan for Inco Ltd. (TSE) will be decided Dec 9 at a special meeting of shareholders.

The $1-billion(US) recapitalization involves the payment of a special cash dividend of $10 per share and the confirmation of a shareholder rights plan which would become effective as of Oct 3, 1988.

Inco has come under fire for its proposed shareholder rights plan, which the company says is designed to help block a takeover attempt and which analysts have dubbed a “poison pill.” The rights plan, according to Inco officials, would require anyone seeking a controlling position in the company to negotiate with the board of directors; the plan might deter a takeover but could not prevent one.

The company says it will finance the special dividend with cash on hand and by borrowing the balance. When the recapitalization proposal was first announced in October, the company estimated the proposal would double its debt to about $1.5 billion. Inco says the special dividend would be paid on or about Jan 9, 1989, to shareholders of record on or about Dec 22, 1988.

Inco is reporting record earnings this year; net income for the first nine months of the year totalled $516.4 million on total income of $2.4 billion.

The company reports it has decided to defer until next year consideration of its previously announced offering of $265 million principal amount of 12-year variable rate subordinated debentures (nickel notes), which the company had planned to undertake through a rights offering to shareholders. The company believes it will not require the proceeds from the offering at this time.