Mining Weekly (Liezel Hill): Spokane, Washington-based Gold Reserve Inc, which is the subject of a hostile takeover bid from Rusoro Mining, has some issues of its own to raise with the Ontario Securities Commission, the firm said on Tuesday.
A day earlier, Rusoro announced that it had applied for an order from the Ontario Securities Commission (OSC) to cease trade in Gold Reserve's shareholder rights plan.
The rights plan, or 'poison pill' enables the company to fend off unwanted takeover bids, but Rusoro argues that Gold Reserve's management will have had more than two months to consider the offer and come up with alternatives by the time the offer expires on February 18.
However, "in the event that a hearing proceeds before the OSC with respect to the rights plan, we also intend to raise with the OSC the various significant and material deficiencies in the offer documents and in Rusoro's public filings," Gold Reserve shot back in a statement. "We are confident that our shareholders will continue to recognise that Rusoro's offer is opportunistic, financially inadequate and significantly undervalues Gold Reserve's assets and its overall contribution to the proposed combined company."
The offer was to have expired last month, but Rusoro extended the deadline, saying that it wanted to resolve uncertainty over the offer, after Gold Reserve filed a court injunction that, if granted, would block the takeover. The injunction will be heard in court on February 4. The injunction was filed because Gold Reserve says Rusoro's advisor on the transaction, Endeavour Financial, had provided advisory services to Gold Reserve too, and had access to confidential and proprietary information.
Vancouver-based Rusoro produces gold from mines in Venezuela and wants to buy Gold Reserve to take control of the firm's Brisas project, in the country. Rusoro is offering three of its own shares for each Gold Reserve class A share and each Gold Reserve equity unit.
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