New Gold friendly merger with Rainy River is not utilizing a Plan of Arrangement

New Gold is offering to acquire Rainy River Resources shares (and related shareholder rights plan rights) for per share consideration of $3.83 in cash or (at the option of the Rainy River shareholder) 0.5 of a New Gold share – but with the total consideration (including on a subsequent squeeze-out transaction) fixed at $198 million in cash and 25.8 million New Gold shares, so that some proration is highly likely.

Although this acquisition is supported by the Rainy River board, it is not proceeding by way of a plan of arrangement (which avoids US share registration requirements) as the issuance of the New Gold shares will occur pursuant to a registration statement under the US Securities Act of 1933.

The tax disclosure is not affected by SRP rights also being acquired.  Similarly to the recent Plazacorp offer for KEYreit units, Rainy River shareholders desiring s. 85 rollover treatment are given only 45 days after take-up to provide the election forms to New Gold.

Neal Armstrong.  Summary of New Gold offer under Mergers & Acquisitions – Friendly Corporate Offers – Shares for Cash and Shares.