Serabai Gold acquisition of Kenai Resources (holding CFAs) will use a Canadian Buyco

Serabi Gold, a UK public company, is proposing to acquire all the shares of Kenai Resources, a BC micro-cap company with a gold property held in a Brazilian subsidiary.  The acquisition is proposed to occur under a three-way exchange pursuant to a plan of arrangement under which the Kenai shareholders will transfer their shares to a BC Newco subsidiary of Serabi (Subco), Serabi will issue ordinary shares to them, and Subco (which has one class of shares) will issue common shares with full stated capital to Serabi.  Subco and Kenai will then amalgamate.

The normal PUC suppression rule in s. 212.3(7) applies to the PUC of the shares of the CRIC (i.e., Subco) "immediately before" the investment time, whereas here the Subco shares are to be issued immediately afterwards.  A dividend substitution election may be planned (see IFA 2013 Round Table, Q. 6(h)), as the same timing rule is not stated to apply in that situation.

As noted in a previous post, CRIC vertical amalgamations are problematic, but presumably Finance will fix that.

Neal Armstrong.  Summary of Kenai Resources Circular under Mergers and Acquisitions – Inbound – Other.