The Canadian Press - ONLINE EDITION

Ventana Gold adopts shareholder rights plan; seeks alternative to EBX bid

By: The Canadian Press

Posted: 30/11/2010 7:02 PM | Comments: 0 | Last Modified: 30/11/2010 7:12 PM

VANCOUVER - Ventana Gold Corp. (TSX:VEN) had adopted what it calls a "limited-duration" shareholder rights plan as it attempts to negotiate an alternative to an unsolicited, $1.5-billion takeover bid by Brazilian resource company EBX.

Under the plan, the board has authorized the issuance of one right in respect of each common share of the company, exercisable if another person or entity acquires or announces an intention to acquire, along with current holdings, 20 per cent or more of the outstanding common shares of the Ventana.

Under such conditions, the holder of such a right — other than the acquiring person and affiliates — would be entitled to purchase common shares "at a substantial discount to the market price of the common shares at that time."

The rights plan, which expires at 5 p.m. Pacific time Jan. 31, is intended to ensure that "in the context of the unsolicited takeover proposal" the Ventana board "has sufficient time to identify, develop and negotiate alternatives to maximize shareholder value."

"The rights plan also seeks to ensure the fair treatment of shareholders and to provide them with adequate time to properly assess any potential takeover bid without undue pressure," the company said in a statement Tuesday.

Vancouver-based Ventana, which is developing a gold and silver project in Colombia, saw its shares soar earlier this month when EBX offered $12.63 per share for the company, 26 per cent above the public market price for the stock prior to the announcement.

The Brazilian company owned about 20 per cent of Ventana's equity prior to the announcement through 63X Master Fund. EBX estimates it would cost $1.23 billion for it to buy the remaining shares at the offer price.

Ventana stock closed Tuesday up 34 cents, or 2.53 per cent, at $13.78.

The takeover bid for the junior miner continues a trend of consolidation in the global gold industry, where bigger players try to buy promising development projects to cash in on record spot prices for bullion on world markets.

As well, many Canadian-headquartered miners operate in Central and South America, where their promising projects eventually come to the attention of local companies and investors with cash to spend.

EBX Group is a Brazilian holding company founded by businessman Eike Batista in 1983 and headquartered in Rio de Janeiro. EBX operates a number of subsidiary companies, including miners, power producers, shipping companies and ports terminals that transport iron ore and other minerals to their markets.

Among other interests, EBX also controls OGX, the largest privately owned Brazilian oil and natural gas producer and the second-largest Brazilian energy company after state-owned giant Petrobras.