ABM, Neptune merger plan to receive a second vote

Although the Ontario Securities Commission has held up the planned merger, ABM will put its theory to the test at a special meeting of Neptune shareholders in Toronto, Nov 28.

The meeting is scheduled to be held at the offices of Northgate Exploration (TSE) which will hold 50% of the equity and 81% of the voting shares in the amalgamated company, should the merger be completed.

The amalgamation is part of Northgate’s plan to simplify its corporate structure.

The meeting is necessary because of an OSC decision to halt trading of ABM class A shares and class B shares, issued as part of the merger. The A shares carry one vote and the B shares 10 votes.

According to Joseph Groia, the OSC’s director of enforcement, the cease trading order was issued because the disclosure in the proxy circular was inadequate and because the transaction wasn’t approved by a majority of minority shareholders at a meeting on Nov 10.

Based on the voting results, the OSC says 1.7 million minority shares voted against the merger while 1.45 million voted for it.

To address the OSC’s concerns, ABM recently sent a letter to Neptune shareholders telling them that they can vote again on the merger on Nov 28 and that both Northgate and Gold Reserve will abstain from voting.

According to the OSC, a special relationship exists between Northgate and Gold Reserve, which holds 4.5 million shares (15.5%) of Neptune. That relationship makes Gold Reserve a part of the majority block of Neptune shareholders and therefore not in a position to vote its share block, according to the OSC.

Gold Reserves and Northgate together hold 17.8 million of Neptune’s 29.2 million shares outstanding.

“The majority of minority shareholders (excluding Northgate and Gold Reserve) of Neptune will have to vote in favor of the transaction in order for it to be approved,” said ABM spokesman Gregory Bowes.

Bowes said ABM has received signed acknowledgements from Neptune minority shareholders representing 6.7 million of the 11.4 million minority shares outstanding. All of the 1.7 million minority shares voted against the merger are thought to be held by Margaret Witte, Neptune’s former president.

As a result of ABM’s decision to hold a second vote, Bowes said the company is hoping that a special OSC hearing scheduled for Nov 23 would be cancelled. He also hopes that the merger will be approved by the Supreme Court of Ontario, Dec 5.

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