Evolving Tactical Defenses By Target Issuers: Private Placements In Response To A Hostile Bid

The Ontario and British Columbia Securities Commissions (the Commissions) issued orders on July 22, 2016 allowing junior B.C.-based miner, Dolly Varden Silver Corp. (Dolly Varden), the target of a hostile takeover bid from Idaho-based Hecla Mining Co. (Hecla), to proceed with a proposed private placement, which was announced shortly after Hecla launched its hostile bid. While the Commissions have not yet published written reasons for the orders, their decision is notable in Canada's new takeover bid regime.

As discussed in a previous post, Canadian securities regulators enacted harmonized amendments to Canada's takeover bid regime earlier this year under Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids, including the requirement for a bid to remain open for a minimum deposit period of 105 days, which in practice has reduced the effectiveness of shareholders' rights plans as a defensive measure for targets. The Dolly Varden and Hecla case was thought