Junior producer Gensource Potash. Corp., Saskatoon, reported on April 9 that its board of directors has approved the adoption of a shareholder rights plan dated April 8, 2019. The plan has been conditionally accepted by the TSX Venture Exchange.
Gensource said the purpose of the plan is to provide both shareholders and the board sufficient time to adequately consider a takeover bid and to ensure the fair treatment of shareholders in connection with such a bid.
It said the plan is similar to those adopted by other Canadian public companies, and that the board and management are currently not aware of any party contemplating or preparing a proposal to acquire control of Gensource, but feel that the possibility for such a situation exists and that it is in the best interests of the company and its shareholders to adopt the plan, often referred to as a “poison pill.”
At the close of business on April 8, existing shareholders were granted rights to acquire additional common shares. The rights were granted for no cash or non-cash consideration. These rights are attached to each share as long as the plan remains in effect. Each new shareholder who acquires the company’s common shares, either pursuant to a new issue by Gensource or in the secondary market, will also be entitled to the rights attached to such common shares for no additional consideration.
The purpose of these rights is to allow shareholders, other than the takeover bidder, to purchase, at a set exercise price, one common share of Gensource for each common share held. This right is triggered only if a party acquires or announces its intention to acquire 20 percent or more of the outstanding shares of Gensource and this proposed acquisition does not meet the requirements of a permitted bid set forth within the plan.
Under the plan, only bids that meet certain specific requirements intended to protect the interests of all shareholders will qualify as permitted bids. Permitted bids, among other things, must be made to all shareholders of Gensource, must remain open for 105 days, and must be made by way of a takeover bid circular prepared in compliance with applicable securities laws.
The board’s approval of the plan is subject to the TSX Venture Exchange’s final acceptance and the ratification by the shareholders of Gensource at a meeting of shareholders within six months of the date upon which the plan was approved.
Gensource hopes to begin construction on the first Vanguard One 250,000 mt/y potash production module in south central Saskatchewan in 2019 (GM Jan. 11, p. 28, Oct. 19, 2018).