The proposed Leagold acquisition of Brio Gold entails the Brio Gold shareholders receiving warrants on Leagold shares on a rollover basis
The proposed acquisition of Brio Gold by Leagold under an Ontario Plan of Arrangement would entail Brio Gold first issuing 2-year warrants on its shares for nil consideration to all its shareholders (with that issuance not being a shareholder benefit based on the s. 15(1)(c) safe harbour) and then the Brio Gold shareholders exchanging their shares and warrants for shares and warrants of Leagold on a rollover basis under ss. 87(4) and (5) under a s. 87(9) triangular amalgamation (also occurring under the Arrangement) of Brio Gold with a Newco sub of Leagold. The Circular estimated that the warrants of Leagold would represent about 3.7% of the combined package of Leagold shares and warrants to be received by the Brio Gold shareholders. The U.S. tax disclosure was reasonably comfortable that this would qualify as a “D” reorg.
Neal Armstrong. Summary of Brio Gold Circular under Mergers & Acquisitions – Amalgamations – Triangular Amalgamations.