RE:Are the there grounds for a lawsuit?such an action could only be filed BEFORE the vote. Otherwise, shareholders have their say to vote in favour or not. If shareholders vote in favour, then all is moot. If shareholders repudiate management and the board by voting no, the CEO is behooved to offer his resignation, however, even if Dev tendered his resignation, it is unlikely the board he chose would accept it.
neofinetia wrote:
Could there be a successful lawsuit to prevent the proposed merger of Fission and Denison?
I have little knowledge of Canadian law and can offer no opinion. But if there are standards of acceptable behavior, and obligations of public company directors to shareholders, there ought to be grounds for a suit.
A director of a public company has a fiduciary obligation to the company’s shareholders. In the case of the proposed merger, management obtained professional advice that the proposed exchange of shares was fair. Most of us would disagree with that assessment but notwithstanding, I suspect that the assessment would stand in a court of law.
As we all know, exploration has turned up impressive results since the terms of the merger were announced. And this is not just my view, it is that of management as well. But it is not only the likely considerable addition to reserves of high-grade shallow mineralization at PLS that makes a difference, there has been a very favorable Preliminary Economic Assessment (PEA). This assessment suggests a value for Fission much higher than the share price, and does not include the mineralization recently indicated.
Meanwhile, little has changed at Denison and although it sold an asset at a higher than expected value, it did not make a material difference to total values.
In an earlier post I asked that if management thought the share exchange ratio was fair on the information we had at that time (July 28), how can it still consider the exchange fair in the light of the success at R600W zone and the PEA?
If management is to fulfill its responsibility to shareholders, it needs to explain why the merger and the consideration to Fission shareholders are still fair in the light of the PEA and exploration. If it can’t do this, it has a moral obligation to call off the merger and pay the termination fee. The only excuse for continuing with the merger is if the value added by exploration success and the PEA is less than the $CAD13 million termination fee. In my opinion, this excuse would not be credible.
I would hope that there is legal recourse if management refuses to recognize the changes that have occurred. I further wonder about the expert opinion relating to the values of Fission and Denison. Could the authors of these fairness reports stand before a judge and claim that the merger terms were still fair? Or how about asking the analysts at the respective investment firms their choice of investment? At present prices, would you prefer to own Denison or Fission if the merger were called off? They may say Denison but in my opinion it would be at the expense of their credibility and integrity.