Mr. Greg Gibson reports
KERR SEEKS SHAREHOLDER CONSENT FOR ACQUISITION OF BEAR LAKE
Kerr Mines Inc. intends to issue 190,934,163 units pursuant to the terms of an arrangement agreement dated Feb. 25, 2014, between Kerr Mines, Bear Lake Gold Ltd. and a wholly owned subsidiary of Kerr Mines.
Pursuant to the terms and conditions of the arrangement agreement, Kerr Mines will acquire all of the issued and outstanding common shares in the capital of Bear Lake pursuant to a plan of arrangement. Assuming the arrangement becomes effective, Bear Lake shareholders will receive 1.4 units for each Bear Lake share held. Each unit will consist of one common share in the capital of Kerr Mines and one-half of one common share purchase warrant of Kerr Mines. Each whole Kerr warrant will entitle the holder thereof to purchase one Kerr share at an exercise price of 16 cents for a period of two years from the closing of the arrangement. The outstanding options to purchase Bear Lake shares will be deemed to be exchanged for options to purchase Kerr shares with appropriate adjustments to reflect the exchange ratio.
The aggregate number of Kerr shares which could be issued in connection with the arrangement (consisting of the 190,934,163 Kerr shares comprising part of the units, the 95,467,081 Kerr shares issuable upon the exercise of the Kerr warrants comprising part of the units and the 7,798,000 Kerr shares issuable upon the exercise of the Kerr replacement options) would be up to 294,199,244 Kerr shares. This would represent 61.9 per cent of the issued and outstanding Kerr shares immediately prior to the arrangement on a non-diluted basis.
Completion of the arrangement will be conditional upon Kerr Mines and Bear Lake obtaining respective requisite shareholder approval, all required regulatory approvals, including the Toronto Stock Exchange and TSX Venture Exchange, and the satisfaction of any conditions imposed by the TSX and/or the TSX-V on the arrangement.
The arrangement is an arm's-length transaction. The arrangement will not materially affect the control of Kerr Mines and no shareholder or combination of shareholders are acting together to influence the outcome of the arrangement.
Pursuant to the terms of the arrangement, David Fennell, the current chairman, chief executive officer and a director of Bear Lake, will be appointed to the board of directors of Kerr Mines. Otherwise, no other insiders will be created as a result of the arrangement, including any person becoming an insider of Kerr Mines by virtue of holding more than 10 per cent of the issued and outstanding Kerr shares.
An application has been filed with the TSX for conditional approval of the arrangement. Pursuant to Section 607(g)(i) of the TSX company manual, the TSX will require Kerr Mines to obtain shareholder approval for the arrangement because the aggregate number of Kerr shares issuable pursuant to the arrangement is greater than 25 per cent of the number of Kerr shares which will be outstanding, on a non-diluted basis, prior to the date of closing of the arrangement.
Pursuant to the policies of the TSX, the TSX will give consideration to permitting Kerr Mines to provide the TSX with written evidence that holders of more than 50 per cent of the voting securities of Kerr Mines are familiar with the terms of the arrangement and are in favour of it rather than holding a special meeting of shareholders to obtain shareholder approval. Management of Kerr Mines will seek to obtain written evidence of such consent. If management of Kerr Mines is successful in obtaining such evidence of shareholder approval of the arrangement, shareholder approval will not be required to be obtained at a special meeting of the shareholders.
A copy of the arrangement agreement is available on SEDAR under the profiles of Kerr Mines and Bear Lake.
We seek Safe Harbor.
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