Nevada Copper Corp T.NCU

Deal with Strategic Investor Not Expected to Go Through

[JayGriff]

If Nevada Copper Inc. and the financiers didn't accept the potential offer / bid / investment from a third party strategic investor, I don't think they are worried about NCI going bankrupt. Seems to me they are very confident in this next phase and know the massive potential and valuel the assets of NCI has.

Below you will find a helpful link on what's involved when a change of control occurs if ever this comes up in the future.

https://uk.practicallaw.thomsonreuters.com/7-501-9618?transitionType=Default&contextData=(sc.Default)&firstPage=true#co_anchor_a884262

Plan of Arrangement

Virtually all recommended transactions involving a change of control of a Canadian public company are effected through a plan of arrangement. This is a court-supervised statutory procedure under corporate law (similar to a scheme of arrangement in other common law jurisdictions) available to facilitate major changes in corporate structure. Under a plan of arrangement, the target's securities of any class can be exchanged for the bidder's securities of any class, or property, including cash. Because an arrangement is a shareholder- and court-approved procedure, it must be put forward by the target and is not available for transactions that are not supported by the target board.

A plan of arrangement is generally favoured by bidders in friendly transactions, given its inherent structural advantages. A plan of arrangement offers a number of advantages:

• It effectively provides a lower target shareholder acceptance threshold than a take-over bid. In general, a plan of arrangement must be approved by two-thirds of the votes cast at a meeting held to consider the arrangement by target shareholders voting in person or by proxy. In addition, a bidder is not prevented from voting although a separate majority of the minority vote excluding the bidder's shares may be required if, for example, the bidder is an insider of the target (see Question 10). In contrast, a take-over bid requires at least a majority of the outstanding target shares to be tendered (excluding shares held by the bidder and its joint actors) or at least two-thirds or 90% of the outstanding target shares (to ensure passage of a second-step squeeze-out transaction to acquire shares not tendered to the bid).
   
• It eliminates bridging and financing risks, since a plan of arrangement is a one-step transaction structure in which 100% of the target is acquired on closing (as opposed to a take-over bid which requires two stages before 100% is acquired).
   
• It facilitates tax-planning opportunities, since a plan of arrangement provides for the ability to clearly order transaction steps around the effective time to allocate tax basis to any divested assets and distribute safe income under Canadian tax rules and return capital.
   
• It provides greater flexibility in dealing with the target's assets, including possible restructurings or spinoffs.
   
• It allows for the possibility of offering unequal consideration to certain target shareholders, which is otherwise prohibited under take-over bid rules.
   
• It does not prohibit collateral benefits (that is, agreements or understandings between a bidder and a target shareholder that have the effect of providing the shareholder with consideration of greater value than the consideration offered to other shareholders), including to related parties of the target (for example, directors and officers receiving change-of-control payments), although a majority of the minority vote may be required in these circumstances.
   
• Pre-transaction purchases of the target's securities are not subject to pre-bid integration rules (see Question 10).
   
• It provides flexibility in dealing with share purchase warrants, stock options, and other convertible securities of the target.
   
• It facilitates the implementation of an exchangeable share structure, which can be used to achieve a tax deferral for Canadian-resident shareholders in circumstances in which a foreign bidder offers its securities as consideration under the arrangement (see Question 19).
   
• It facilitates the availability of the registration exemption in section 3(a)(10) of the US Securities Act of 1933 where the bidder offers its securities as consideration.