The Ontario Securities Commission has long been averse to "poison pills." But in recent months it seems to have become somewhat less so, as evidenced by its handling of the case of Neo Material Technologies (TSX: NEM).
Securities regulatory hearings throughout Canada could become a good deal more interesting because of the uncertainty generated by NEM in September 2009. You can read that decision here.
NEM produces, processes, and develops neodymium-iron-boron magnetic powers and other engineered materials at plants in China and in Thailand.
The bidder, Pala Investments Holdings, asked the OSC to remove the impediment to shareholders’ ability to tender their shares to the Pala Offer posed by the Second Shareholder Rights Plan. As that commission noted, this plan "was adopted by Neo’s Board of Directors (the “Neo Board”) in the context of the Pala Offer, and can be seen as a tactical defensive pill. As well, in the context of the unsolicited Pala Offer, a significant majority of Neo’s shareholders recently voted to retain the Second Shareholder Rights Plan."
Given that statement of the issue, Pala had some reason for confidence. But the OSC denied that holding company its requested remedy, saying that a pill may be maintained. It derived this result through a bit of ad hoc balancing, weighing the duty of the directors of NEM to maximize shareholder value "in the manner they see fit" against the "right of the shareholders to decide whether to tender their shares to the bid."
One possible meaning of this ruling, going forward, is that target boards will be permitted to "just say no" to unsolicited bids that they (reasonably) consider to threaten the best interests of the corporation – at least when, as in this case, the continued deployment of the pill was properly ratified by the shareholders.
Showing posts with label Ontario. Show all posts
Showing posts with label Ontario. Show all posts
Wednesday, January 13, 2010
Monday, October 19, 2009
Marc Dreier
For those of you who may have forgotten, Marc Dreier was the big finance-world criminal who made headlines just before Bernie Madoff. Madoff's scheme was so large that it drove everything else of that genre out of the minds of the personally unaffected, but the Dreier case has its own charm.
There is, of course a wiki article if you'd like a more detailed refresher course.
Very briefly, though, Dreier was a lawyer who duped a lot of hedge funds into buying forged notes, many of them supposedly issued by Solow Realty, a corporate vehicle of a real-enough client of Dreier's, developer Sheldon Solow.
But he also forged notes supposedly issued by the Ontario Teachers' Pension Plan. This turned out to be a bit of overreaching. People who moved in Solow's circles knew Dreier and vice versa, and they could take it on faith Dreier was speaking for Solow as to the notes. But the OTPP? The would-be note buyers wanted re-assurance. And so it was that it was at OTPP headquarters in Toronto that the scheme reached its bizaare denoument on Tuesday, December 2.
This comes to mind because Bryan Burrough has a fine article on the Dreier case in the November issue of VANITY FAIR. what I especially like about the Burrough story is his discussion of the long and tangled Solow/Dreier relationship.
Dreier was often Solow's pitbull. When Solow pointed out a target, Dreier's fangs could sink truly and deeply. There was for example a tussle with Peter Morton of the Hard Rock Cafe chain, in which a judge dismissed the third Drier/Solow lawsuit on point, saying Solow has "had so many bites at the apple, [he] has swallowed the core."
And there was a dispute between Solow and another Manhattan developer, Peter Kalikow. The Solow/Dreier campaign of vindictiveness at Kalikow's expense led to some positively sputtering language by Judge Burton Lifland, who described Dreier's actions as "tacky, shabby, base, low, malicious, petty, nasty, unsavory" and other like descriptors.
That's laying it out for us, your honor.
There is, of course a wiki article if you'd like a more detailed refresher course.
Very briefly, though, Dreier was a lawyer who duped a lot of hedge funds into buying forged notes, many of them supposedly issued by Solow Realty, a corporate vehicle of a real-enough client of Dreier's, developer Sheldon Solow.
But he also forged notes supposedly issued by the Ontario Teachers' Pension Plan. This turned out to be a bit of overreaching. People who moved in Solow's circles knew Dreier and vice versa, and they could take it on faith Dreier was speaking for Solow as to the notes. But the OTPP? The would-be note buyers wanted re-assurance. And so it was that it was at OTPP headquarters in Toronto that the scheme reached its bizaare denoument on Tuesday, December 2.
This comes to mind because Bryan Burrough has a fine article on the Dreier case in the November issue of VANITY FAIR. what I especially like about the Burrough story is his discussion of the long and tangled Solow/Dreier relationship.
Dreier was often Solow's pitbull. When Solow pointed out a target, Dreier's fangs could sink truly and deeply. There was for example a tussle with Peter Morton of the Hard Rock Cafe chain, in which a judge dismissed the third Drier/Solow lawsuit on point, saying Solow has "had so many bites at the apple, [he] has swallowed the core."
And there was a dispute between Solow and another Manhattan developer, Peter Kalikow. The Solow/Dreier campaign of vindictiveness at Kalikow's expense led to some positively sputtering language by Judge Burton Lifland, who described Dreier's actions as "tacky, shabby, base, low, malicious, petty, nasty, unsavory" and other like descriptors.
That's laying it out for us, your honor.
Sunday, August 23, 2009
Judge Dismisses Biovail lawsuit
This week a judge in a state court in New Jersey has dismissed a suit against the hedge fund SAC, the investment vehicle of Steven A. Cohen. This is the lawsuit brought by the Canadian pharmaceutical company Biovail, the lawsuit that attained especial prominence because it was the object of a "60 Minuites" profile in March 2006.
The opinion dismissing the case is available through Scribd.
Initiated on February 22, 2006, and first couched in terms of the New Jersey Racketeering Influenced and Corrupt Organizations Act. The case had been removed the federal court immediately upon filing, but then remanded to state court.
But it was tainted, in the opinion of the court, because the documents from Bank of America Securities pursuant to a protective order back in 2005 were then wrongly used to draft the complaint in the state case.
Apparently pursuant to a desire to remove that taint and under the sway of new counsel, Biovail reframed the complaint in trade libel, and took the position that the New Jersey court should apply Ontario's law. New Jersey has a "substantial relationship" test on choice of law. Specifically, in a tort action the law of the place of injury should govern unless another forum has a more significant relationship to the place or parties.
Most of the defendants are situated in New York, and the stock is traded in New York on the NYSE, so thatis the law he applies. And New York has strict requirements for the pleading of "special damages" in trade libel.
Bottom line, "Biovail's complaint fails in that the statements alleged are not the type that are considered within the gamut of trade libel, but rather defamation, a claim for which the statute of limitations has long since run." The opinion gives the impression that Biovail lost interest in the matter after its own recent executive upheavals, which I have chronicled in other posts here.
The opinion dismissing the case is available through Scribd.
Initiated on February 22, 2006, and first couched in terms of the New Jersey Racketeering Influenced and Corrupt Organizations Act. The case had been removed the federal court immediately upon filing, but then remanded to state court.
But it was tainted, in the opinion of the court, because the documents from Bank of America Securities pursuant to a protective order back in 2005 were then wrongly used to draft the complaint in the state case.
Apparently pursuant to a desire to remove that taint and under the sway of new counsel, Biovail reframed the complaint in trade libel, and took the position that the New Jersey court should apply Ontario's law. New Jersey has a "substantial relationship" test on choice of law. Specifically, in a tort action the law of the place of injury should govern unless another forum has a more significant relationship to the place or parties.
Most of the defendants are situated in New York, and the stock is traded in New York on the NYSE, so thatis the law he applies. And New York has strict requirements for the pleading of "special damages" in trade libel.
Bottom line, "Biovail's complaint fails in that the statements alleged are not the type that are considered within the gamut of trade libel, but rather defamation, a claim for which the statute of limitations has long since run." The opinion gives the impression that Biovail lost interest in the matter after its own recent executive upheavals, which I have chronicled in other posts here.
Monday, July 14, 2008
Greenlight Capital
An Ontario-based real estate development company has defeated claims brought in Canada's courts by the hedge fund Greenlight, to the effect that the development company's founder, Frank Stronach, has exercised excessive influence over the rest of its board, to the detriment of non-controlling shareholders such as Greenlight.
The company, MI Developments Inc., or MID, was created in 2003 when it was spun off from Magna International, an auto parts concern.
Greenlight owns more than 10% of MID shares, and it has contended that MID falsely held itself out to investors as a conventional real estate company, while turning itself into something a good deal more speculative. Specifically, it entered into challenged transactions with the Magna Entertainment Corporaton (MEC), a Delaware chartered company that owns and manages horseracing and gambling facilities in North America and Austria.
Greenlight lost both at the trial level, and more recently on its appeal. Here is the opinion.
I can't say I understand what it is all about. I'm still feeling my way through it. But I do have a sense that there's something important going on here and that understanding the issues in this lawsuit would have valuable ramifications.
As always, I'm open to your comments and assistance, dear readers.
The company, MI Developments Inc., or MID, was created in 2003 when it was spun off from Magna International, an auto parts concern.
Greenlight owns more than 10% of MID shares, and it has contended that MID falsely held itself out to investors as a conventional real estate company, while turning itself into something a good deal more speculative. Specifically, it entered into challenged transactions with the Magna Entertainment Corporaton (MEC), a Delaware chartered company that owns and manages horseracing and gambling facilities in North America and Austria.
Greenlight lost both at the trial level, and more recently on its appeal. Here is the opinion.
I can't say I understand what it is all about. I'm still feeling my way through it. But I do have a sense that there's something important going on here and that understanding the issues in this lawsuit would have valuable ramifications.
As always, I'm open to your comments and assistance, dear readers.
Subscribe to:
Posts (Atom)
