Cornerstone Recommends Shareholders Take No Action in Response to Hostile Takeover Bid by SolGold30 Jun 2020 22:37
OTTAWA, June 30, 2020 (GLOBE NEWSWIRE) -- Cornerstone Capital Resources Inc. (“Cornerstone” or “the Company”) (TSXV:CGP) (Frankfurt:GWN) (Berlin:GWN) (OTC:CTNXF) today acknowledged that SolGold plc (“SolGold”) has formally commenced an unsolicited offer (the “Hostile Bid”) to acquire all of the issued and outstanding common shares of Cornerstone, nearly eighteen months since announcing its intention to make a takeover bid for Cornerstone on January 31, 2019.
As noted in Cornerstone’s March 8, 2019 press release in response to SolGold’s initial proposed bid, Cornerstone’s Board of Directors, upon the unanimous recommendation of an independent committee of the Board and following a detailed review conducted in consultation with its financial and legal advisors, at that time unanimously determined to reject the proposed bid on the basis that it was not in the best interests of Cornerstone’s shareholders.
In March 2019, the Board rejected SolGold’s proposed bid because, among other reasons, the proposed bid had already been rejected by Cornerstone shareholders that collectively owned or controlled a majority of the outstanding shares of the Company. Cornerstone has already been advised today by shareholders that collectively own or control over 50% of the outstanding common shares of the Company that they intend to REJECT the Hostile Bid and WILL NOT TENDER their shares. Canadian takeover rules require the majority of Cornerstone’s outstanding common shares (excluding those shares held by SolGold) be tendered to a formal offer before any shares can be taken up. Given that the statutory minimum tender condition cannot be waived by SolGold, the proposed Hostile Bid is incapable of being completed on the basis that it lacks sufficient shareholder support.
The Board also rejected SolGold’s proposed bid in March 2019 because the proposed bid significantly undervalued Cornerstone and failed to recognize the substantial value of Cornerstone’s assets, as more fully discussed in Cornerstone’s March 8, 2019 press release. SolGold’s present offer of 11 ordinary shares of SolGold for each Cornerstone common share tendered into the Hostile Bid is consistent with SolGold’s initial proposed bid in 2019. The Board and its financial advisors will update their financial analysis and make a formal recommendation to shareholders in this regard.
Cornerstone believes that the timing of SolGold’s announcement is highly dubious given the deadline for Cornerstone shareholders to tender their shares is October 14, 2020. One can assume it is intended to pre-empt Cornerstone’s ability to enter into a value enhancing transaction with third parties, such as BHP that have an unusual standstill that does not expire until October 19, 2020.
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