Private Placements As Defensive Tactics In Take-Over Bids

The Ontario Securities Commission ("OSC") and British Columbia Securities Commission ("BCSC") recently released their written reasons regarding applications made by Hecla Mining Company ("Hecla") and Dolly Varden Silver Corporation ("DV") in connection with Hecla's hostile cash bid for all of DV's outstanding shares.

This was the first instance after the adoption of changes to the Canadian take-over bid regime, which became effective in May 2016, in which Canadian securities regulators have had to consider whether a private placement, in the midst of a hostile take-over bid, was an inappropriate defensive tactic.

The changes to the take-over bid rules, which are now contained in National Instrument 62-104 – Take-Over Bids and Issuer Bids and National Policy 62-203 – Take-Over Bids and Issuer Bids, require that all take-over bids in Canada: (i) remain open for a minimum period of 105 days unless the target board reduces the bid period (to a minimum of 35 days) or