Shareholder RightsDue to the consistent short selling on VGCX stock, there's been some speculation as to whether a hostile bid is in the works. I don't know how viable this is, since a shareholders resolution from 2021 seems to indicate that such a strategy would be hard to implement.
TORONTO, Ontario, May 14, 2021 (GLOBE NEWSWIRE) -- Victoria Gold Corp. (TSX-VGCX) (“Victoria” or the “Company”) announces that it has adopted a shareholder rights plan (the “Rights Plan”) effective today.
The Rights Plan is designed to ensure that all Victoria shareholders are treated fairly in connection with any take-over bid and to protect against “creeping bids”, which involve the accumulation of more than 20%, on an aggregate basis, of Victoria’s common shares (the “Common Shares”) through purchases exempt from applicable take over-bid rules.
Pursuant to the Rights Plan, one right attaches to each issued and outstanding Common Share. Subject to the terms of the Rights Plan, the rights become exercisable in the event that any person (together with certain related parties) becomes a beneficial holder of 20% or more of the outstanding Common Shares without complying with the “Permitted Bid” provisions under the Rights Plan. In such event, holders of the rights (other than the acquiring person and its related parties) will be permitted to exercise their rights to purchase additional Common Shares at a 50% discount to the then prevailing market price of the Common Shares.
This, combined with the fact that current management is overcompensated, for relative company market cap, makes me skeptical of a hostile bid materializing. It seems like management has built a pretty big moat between themselves and the shareholder and I feel like there's very little incentive to deliver the goods.