OSC Intervenes In Private Placement Implemented During Proxy Contest

Summary

On April 23, 2017, the Ontario Securities Commission (OSC) overturned a decision of the Toronto Stock Exchange (TSX) conditionally approving a private placement by Eco Oro Minerals Corp. ("Eco Oro") in the midst of a proxy contest to replace the Eco Oro board. The OSC's order is the latest in a series of recent decisions by Canadian securities regulators considering the validity of so-called "tactical" private placements implemented in hostile situations such as unsolicited take-over bids, voting transactions and proxy contests.

Background

Eco Oro is a TSX-listed company whose main asset is an arbitration claim against the Government of Columbia to recover damages for the loss of the Angostura gold/silver mining project. In 2015, Eco Oro was in desperate need of capital to fund the arbitration proceeding and its working capital needs. After unsuccessfully attempting to raise funds through conventional financings, Eco Oro entered into a series of