John Emanoilidis Weighs in on Dolly Varden’s Private Placement for Lexpert

August 03, 2016

On June 27, Hecla Mining announced its intention to make an unsolicited takeover offer to acquire Dolly Varden Silver, marking the first hostile bid made under Canada’s new takeover bid regime. In response to the hostile bid, Dolly Varden employed a private placement; Hecla’s subsequent request to regulators to cease trade the private placement was refused (read our full analysis of the Dolly Varden cease trade here). Partner and co-head of our M&A Practice John Emanoilidis was sought for comment by Lexpert to weigh in on how these developments may impact market players going forward. Below is an excerpt of the article.

Emanoilidis notes that Dolly Varden did need financing: “The evidence was that there was talk about financing in advance of the bid, so you have to ask yourself whether you’re going to prevent issuers in need of financing from accessing private placements just because a hostile bid has intervened.”

However that may be, Emanoilidis notes that the new regime includes a mandatory minimum tender condition of over 50 per cent of outstanding shares. “The 50-per-cent requirement elevates the risk that private placements will be used as defensive tactics going forward, because they make it more difficult for the bidder to acquire the threshold,” he says. “It’s of some interest that the first hostile bid under the new regime came with this twist.”

To read the full article on Lexpert’s website, click here.

Read our comprehensive background and analysis on Canada’s new takeover bid regime here.


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