########################################
#Written by David Tam, 1997. #
#davidkftam@netscape.net Copyright 1999#
########################################
David Tam
Tuesday, February 11, 1997.
BUSINESS PRESS REVIEW
=====================
Jang, Brent. "Canadian 88 scraps takeover". The Globe and Mail.
Monday, February 10, 1997. B1,B2. ------------------
A hostile takeover bid of Morrison Petroleums Ltd by Canadian 88 Energy
Corp was abruptly cancelled. Proposing a $652-million hostile takeover,
Canadian 88 was offering a mixture of $140-million in cash and a 1.5 swap of
its own shares for each Morrison share. This deal, with allegations of
preceding security breaches has come to the attention of the Ontario Securities
Commission (OSC) and its counterpart in Alberta. The OSC had planned a hearing
yesterday to make a ruling on this concern. However, Canadian 88 abruptly
dropped its attempted takeover and now has no future plans of acquiring the
company. These allegations involved Canadian 88 lending money to West Central
Capital Corp, an associated company, for acquiring shares of Morrison before
the announced takeover bid. From this loan, West Central acquired nearly 9% of
Morrison's shares, but these details were not disclosed in Canadian 88's
offering circular.
This article shows the types of securities regulation the provincial
governments of Canada have legislated to protect investors. It also shows how
the provincial government has delegated responsibility of its securities laws
to the OSC and other similar provincial securities commissions. The
allegations mentioned in the article deals with disclosure and possibly insider
trading issues. Because Canadian 88 knew that was going to acquire shares of
Morrison through a hostile takeover, it attempted an early purchase some of
Morrison's shares indirectly through Central Central, its associated company.
This give's Canadian 88 an early start and an unfair advantage. Dealing with
the issues of disclosure, Canadian 88 had failed to fully disclose its current,
indirect equity position on Morrison. I believe that Canadian 88 had indeed
breached security regulations and were attempting to bury the problem by
cancelling their bid. They hoped that the OSC would cancel the hearing.
(
geocities.com/siliconvalley/campus/9640/2ndYear) (
geocities.com/siliconvalley/campus/9640) (
geocities.com/siliconvalley/campus) (
geocities.com/siliconvalley)