EXHIBIT 2.1
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN
ANY DOUBT AS TO HOW TO DEAL WITH IT, YOU SHOULD CONSULT YOUR INVESTMENT DEALER,
STOCKBROKER, BANK MANAGER, LAWYER OR OTHER PROFESSIONAL ADVISOR.
May 29,1998
CASH OFFER
BY
779776 ALBERTA LTD.,
A WHOLLY-OWNED SUBSIDIARY OF
SOUTHERN MINERAL CORPORATION
TO PURCHASE ALL OF THE
COMMON SHARES OF
NEUTRINO RESOURCES INC.
AT A PRICE OF $1.80 (CANADIAN) PER COMMON SHARE
This offer (the "Offer") by 779776 Alberta Ltd. ("Southern
Acquisition"), a wholly-owned subsidiary of Southern Mineral Corporation
("Southern") to purchase all of the outstanding common shares of Neutrino
("Neutrino Shares") will be open for acceptance until 4:30 p.m. (local time) on
June 22, 1998, unless withdrawn or extended. The Offer is conditional upon,
among other things, there being validly deposited under the Offer and not
withdrawn at least 66_% of the Neutrino Shares (calculated on a fully diluted
basis) other than Neutrino Shares owned on the date of the Offer by Southern
Acquisition, its associates and affiliates. This condition and the other
conditions of the Offer are described in Section 4 of the Offer, "Conditions of
the Offer".
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF NEUTRINO UNANIMOUSLY RECOMMENDS THAT THE OFFER FOR THE
NEUTRINO SHARES BE ACCEPTED AND THAT THE HOLDERS OF NEUTRINO SHARES TENDER THEIR
NEUTRINO SHARES TO THE OFFER. FOR FURTHER INFORMATION, REFER TO THE DIRECTORS'
CIRCULAR.
- --------------------------------------------------------------------------------
Holders of 10,489,543 Neutrino Shares (representing 37.8% of the issued
and outstanding Neutrino Shares) have agreed to accept the Offer, subject to
certain conditions.
Holders of Neutrino Shares who wish to accept the Offer must properly
complete and execute the accompanying Letter of Transmittal or a manually
executed facsimile thereof and deposit it, together with the certificate or
certificates representing their Neutrino Shares, at one of the offices of
Montreal Trust Company of Canada (the "Depositary") shown in the Letter of
Transmittal and on the last page of this document, in accordance with the
instructions in the Letter of Transmittal. Alternatively, a holder of Neutrino
Shares who wishes to deposit such shares and whose certificate or certificates
for such shares are not immediately available may deposit such certificate or
certificates by following the procedures for guaranteed delivery set forth in
Section 3 of the Offer, "Manner of Acceptance".
The Neutrino Shares are listed and posted for trading on the TSE. On May
12, 1998, the last day on which the Neutrino Shares traded prior to the public
announcement by Southern of its intention to make the Offer, the closing price
of the Neutrino Shares on the TSE was $1.41.
Questions and requests for assistance may be directed to Griffiths
McBurney & Partners (the "Dealer Manager") or the Depositary and additional
copies of this document, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained upon request without charge from those persons at their
respective offices shown in the Letter of Transmittal and on the last page of
this document. Persons whose Neutrino Shares are registered in the name of a
nominee should contact their stockbroker, investment dealer, bank, trust company
or other nominee for assistance in depositing their Neutrino Shares.
The Dealer Manager for the Offer is:
GRIFFITHS MCBURNEY & PARTNERS
(COVER CONTINUED ON FOLLOWING PAGE.)
ii
NOTICE TO SHAREHOLDERS IN THE UNITED STATES
THIS TENDER OFFER IS MADE FOR THE SECURITIES OF A FOREIGN ISSUER AND
WHILE THE OFFER IS SUBJECT TO THE DISCLOSURE REQUIREMENTS OF CANADA,
SHAREHOLDERS OF NEUTRINO SHOULD BE AWARE THAT THESE REQUIREMENTS ARE DIFFERENT
FROM THOSE OF THE UNITED STATES.
SHAREHOLDERS OF NEUTRINO SHOULD BE AWARE THAT THE TENDER OF THE
SECURITIES DESCRIBED HEREIN MAY HAVE TAX CONSEQUENCES BOTH IN THE UNITED STATES
AND IN CANADA. SEE "UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS" IN THE
CIRCULAR.
PROSPECTIVE INVESTORS SHOULD BE AWARE THAT, DURING THE PERIOD OF THE
TENDER OFFER, SOUTHERN ACQUISITION OR ITS AFFILIATES, DIRECTLY OR INDIRECTLY,
MAY BID FOR OR MAKE PURCHASES OF THE SECURITIES TO BE ACQUIRED, OR CERTAIN
RELATED SECURITIES, AS PERMITTED BY APPLICABLE LAWS OR REGULATIONS OF CANADA OR
ITS PROVINCES OR TERRITORIES.
THE ENFORCEMENT BY INVESTORS OF CIVIL LIABILITIES UNDER UNITED STATES
FEDERAL SECURITIES LAWS MAY BE AFFECTED ADVERSELY BY THE FACT THAT SOUTHERN
ACQUISITION IS INCORPORATED UNDER THE LAWS OF ALBERTA, THAT SOME OF ITS
DIRECTORS ARE RESIDENTS OF CANADA, THAT THE DEALER MANAGER AND SOME OR ALL OF
THE EXPERTS NAMED IN THE OFFER OR CIRCULAR ARE RESIDENTS OF CANADA AND THAT ALL
OR A SUBSTANTIAL PORTION OF THE ASSETS OF SOUTHERN ACQUISITION AND OF SAID
PERSONS MAY BE LOCATED OUTSIDE THE UNITED STATES.
NO BROKER, DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN
THIS DOCUMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SOUTHERN ACQUISITION, THE DEALER
MANAGER OR THE DEPOSITARY.
------------------------
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE
OFFER IS NOT BEING MADE TO, NOR WILL DEPOSITS BE ACCEPTED FROM OR ON BEHALF OF,
HOLDERS OF NEUTRINO SHARES IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION, INCLUDING
ANY STATE OF THE UNITED STATES IN WHICH THE OFFER HAS NOT BEEN QUALIFIED.
HOWEVER, SOUTHERN ACQUISITION MAY, IN ITS SOLE DISCRETION, TAKE SUCH ACTION AS
IT MAY DEEM NECESSARY TO EXTEND THE OFFER TO HOLDERS OF NEUTRINO SHARES IN ANY
SUCH JURISDICTION.
CURRENCY AND EXCHANGE RATES
All dollar references in the Offer and Circular are to Canadian dollars,
unless otherwise indicated.
The following table sets forth for the periods indicated certain
exchange rates based on the noon buying rate in the City of New York for cable
transfers in Canadian dollars as certified for customs purposes by the Federal
Reserve Bank of New York (the "Noon Buying Rate"). Such rates are set forth as
United States dollars per Canadian $1.00 and are the inverse of rates quoted by
the Federal Reserve Bank of New York for Canadian dollars per U.S. $1.00.
- ------------------------------------------------ -- -------------------------------------------
Year ended December 31
- ------------------------------------------------ -- --------- -------- ------- ------- --------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Noon Buying Rate at end of period (U.S. $) .6997 .7301 .7323 .7128 .7544
--------- -------- ------- ------- --------
Average Noon Buying Rate during period (U.S. $) .7223 .7332 .7305 .7300 .7729
--------- -------- ------- ------- --------
Highest Noon Buying Rate during period (U.S. $) .7495 .7513 .7527 .7632 .8046
--------- -------- ------- ------- --------
Lowest Noon Buying Rate during period (U.S. $) .6945 .7235 .7023 .7103 .7439
--------- -------- ------- ------- --------
On May 28, 1998, the Noon Buying Rate was Canadian $1.00 = U.S. $0.6871.
iii
TABLE OF CONTENTS
PAGE
DEFINITIONS..................................................................1
SUMMARY......................................................................4
OFFER TO PURCHASE............................................................8
1. The Offer...........................................................8
2. Time for Acceptance.................................................8
3. Manner of Acceptance................................................8
4. Conditions of the Offer............................................10
5. Extension and Variation of the Offer...............................12
6. Payment for Deposited Neutrino Shares..............................13
7. Withdrawal of Deposited Neutrino Shares ...........................14
8. Return of Deposited Neutrino Shares ...............................15
9. Changes in Capitalization, Distributions and Liens.................15
10. Mail Service Interruption..........................................15
11. Notice.............................................................16
12. Acquisition of Neutrino Shares Not Deposited.......................16
13. Market Purchases and Sales of Neutrino Shares......................16
14. Other Terms of the Offer...........................................17
CIRCULAR....................................................................18
PURPOSE OF THE OFFER AND PLANS FOR NEUTRINO.................................18
Purpose of the Offer...................................................18
Plans for Neutrino.....................................................18
BACKGROUND TO AND REASONS FOR THE OFFER.....................................18
MERGER AGREEMENT ...........................................................19
SOUTHERN ACQUISITION AND SOUTHERN...........................................20
NEUTRINO RESOURCES INC......................................................20
General................................................................20
Description of Share Capital...........................................20
Dividend Record and Policy.............................................21
Price Range and Trading Volume of Neutrino Shares......................21
SOURCE OF FUNDS.............................................................21
EFFECT OF THE OFFER ON MARKET AND LISTING...................................22
ACQUISITION OF NEUTRINO SHARES NOT DEPOSITED................................22
General................................................................22
Compulsory Acquisition.................................................22
Subsequent Acquisition Transactions....................................23
Other Alternatives.....................................................24
Judicial Developments..................................................25
DEPOSITARY..................................................................25
SOLICITING DEALER GROUP.....................................................26
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS..................................26
General................................................................26
Shareholders Resident in Canada........................................27
Shareholders Not Resident in Canada....................................27
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.............................28
OWNERSHIP OF SECURITIES OF NEUTRINO.........................................29
TRADING IN SECURITIES OF NEUTRINO...........................................29
COMMITMENTS TO ACQUIRE SECURITIES OF NEUTRINO...............................29
ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS..................................30
MATERIAL CHANGES IN THE AFFAIRS OFNEUTRINO AND OTHER INFORMATION............30
ACCEPTANCE OF THE OFFER.....................................................30
EXPENSES OF THE OFFER.......................................................30
STATUTORY RIGHTS............................................................30
CONSENTS OF COUNSEL.........................................................31
APPROVAL AND CERTIFICATE....................................................32
DEFINITIONS
IN THE OFFER AND THE CIRCULAR, THE FOLLOWING TERMS SHALL HAVE THE MEANINGS SET
FORTH BELOW, UNLESS THE SUBJECT MATTER OR CONTEXT IS INCONSISTENT THEREWITH OR
SUCH TERMS ARE OTHERWISE DEFINED IN THE OFFER OR CIRCULAR.
"ABCA" means the BUSINESS CORPORATIONS ACT (Alberta), as amended;
"AFFILIATE" has the meaning ascribed thereto in the SECURITIES ACT (Alberta), as
amended, except as otherwise provided herein;
"ASSOCIATE" has the meaning ascribed thereto in the SECURITIES ACT (Alberta), as
amended, except as otherwise provided herein;
"BUSINESS DAY" means any day other than a Sunday, Saturday or a day on which
banking institutions in Calgary, Alberta are authorized or obligated by law to
close;
"CIRCULAR" means the take-over bid circular accompanying the Offer and forming
part of this document;
"COMPULSORY ACQUISITION" has the meaning ascribed thereto under "Acquisition of
Neutrino Shares Not Deposited - Compulsory Acquisition" in the Circular;
"DEALER MANAGER" means Griffiths McBurney & Partners;
"DEPOSITARY" means Montreal Trust Company of Canada at the offices specified in
the Letter of Transmittal and on the last page of this document;
"DIRECTORS' CIRCULAR" means the circular dated May 29, 1998 prepared by the
board of directors of Neutrino and sent to all Shareholders in connection with
the Offer;
"ELIGIBLE INSTITUTION" means a Canadian chartered bank, a trust company in
Canada, a commercial bank or trust company having an office, branch or agency in
the United States, or a member firm of the TSE, the Montreal Exchange, the
Vancouver Stock Exchange, The Alberta Stock Exchange, a national securities
exchange in the United States or the National Association of Securities Dealers,
Inc.;
"EXPIRY DATE" means June 22, 1998 or such other date or dates as may be fixed by
Southern Acquisition from time to time pursuant to Section 5 of the Offer,
"Extension and Variation of the Offer";
"EXPIRY TIME" means 4:30 p.m. (local time) on the Expiry Date or such other time
or times as may be fixed by Southern Acquisition from time to time pursuant to
Section 5 of the Offer, "Extension and Variation of the Offer";
"FULLY DILUTED BASIS" means, with respect to the number of outstanding Neutrino
Shares at any time, such number of outstanding Neutrino Shares calculated
assuming the proper exercise of all outstanding Neutrino Options which are not
cancelled or surrendered on or before the date on which Southern Acquisition
first takes up and pays for Neutrino Shares deposited pursuant to the Offer;
"LETTER OF TRANSMITTAL" means the letter of acceptance and transmittal in the
form accompanying the Offer and Circular;
"LOCK-UP AGREEMENTS" means the separate agreements dated May 13, 1998 between
Southern and the Tendering Shareholders;
"MATERIAL ADVERSE CHANGE" means any change (or any condition, event or
development involving a prospective change) in the business, operations, results
of operations, assets, capitalization, financial condition, licenses, permits,
concessions, rights, liabilities, prospects or privileges, whether contractual
or otherwise, of Neutrino, which is materially adverse to the business of
Neutrino considered as a whole, other than a change: (i) which has been publicly
2
disclosed prior to May 29, 1998; or (ii) in general economic conditions,
including changes in interest rates and commodity prices;
"MERGER AGREEMENT" means the agreement dated May 13, 1998 between Southern and
Neutrino;
"MINIMUM CONDITION" has the meaning ascribed thereto in subsection (a) of
Section 4 of the Offer, "Conditions of the Offer";
"NEUTRINO" means Neutrino Resources Inc., a public oil and gas corporation
incorporated under the ABCA;
"NEUTRINO OPTIONS" means all options, warrants or other rights to acquire
Neutrino Shares which are issued and outstanding from time to time, including,
without limitation, an aggregate of 2,112,569 stock options and 3,645,455 common
share purchase warrants and rights;
"NEUTRINO SHARES" means the common shares of Neutrino, as constituted on the
date hereof;
"NOTICE OF GUARANTEED DELIVERY" means the notice of guaranteed delivery in the
form accompanying the Offer and Circular;
"OFFER" means the offer to purchase all of the issued and outstanding Neutrino
Shares made hereby to Shareholders;
"OFFER PERIOD" means the period commencing on May 29, 1998 and ending at the
Expiry Time;
"PERSON" includes an individual, body corporate, partnership, syndicate or other
form of unincorporated entity;
"SHAREHOLDER" means a holder of Neutrino Shares and "SHAREHOLDERS" mean the
holders of Neutrino Shares;
"SOLICITING DEALER GROUP" means the soliciting dealer group to be formed by the
Dealer Manager for the purpose of soliciting acceptances of the Offer from
Shareholders, as referred to under "Soliciting Dealer Group" in the Circular;
"SOUTHERN" means Southern Mineral Corporation, a public oil and gas corporation
incorporated under the laws of Nevada;
"SOUTHERN ACQUISITION" means 779776 Alberta Ltd., a private corporation
incorporated under the ABCA and a wholly-owned subsidiary of Southern;
"SUBSEQUENT ACQUISITION TRANSACTION" has the meaning ascribed thereto under
"Acquisition of Neutrino Shares Not Deposited -- Subsequent Acquisition
Transactions" in the Circular;
"SUBSIDIARY" has the meaning ascribed thereto in the SECURITIES ACT (Alberta),
as amended, except as otherwise provided herein;
"SUPERIOR TAKE-OVER PROPOSAL" means any bona fide written Take-over Proposal
which, in the opinion of the board of directors of Neutrino after consultation
with its financial advisors, constitutes a commercially feasible transaction for
which adequate financial arrangements have been made and which, if consummated,
would be superior to the Offer from a financial point of view to Neutrino and to
the Shareholders;
"TAKE-OVER PROPOSAL" means, in respect of Neutrino or its assets, any public
statement or announcement, or communication with the board of directors, any
individual members of the board of directors or the senior officers of Neutrino
of an intention with respect to making a proposal or an offer regarding any
take-over bid for 20% or more of the Neutrino Shares or any business
combination, merger, consolidation, amalgamation, arrangement, sale of 20% or
more of Neutrino's assets or other similar transaction;
"TAX ACT" means the INCOME TAX ACT (Canada), as amended;
"TENDERING SHAREHOLDERS" means collectively, certain significant shareholders of
Neutrino and all of its directors and
3
senior officers;
"TSE" means The Toronto Stock Exchange; and
"U.S." or "UNITED STATES" means United States of America.
4
SUMMARY
THE FOLLOWING IS A SUMMARY ONLY OF THE ATTACHED OFFER AND CIRCULAR, THE
LETTER OF TRANSMITTAL AND THE NOTICE OF GUARANTEED DELIVERY, AND IS QUALIFIED IN
ITS ENTIRETY BY THE DETAILED PROVISIONS CONTAINED IN THOSE DOCUMENTS.
THE OFFER
The Offer is made by Southern Acquisition for all of the outstanding
Neutrino Shares, including Neutrino Shares which may become outstanding on the
exercise of options, warrants or rights to acquire Neutrino Shares, at a price
of $1.80 (Canadian) in cash for each Neutrino Share. The Offer is open for
acceptance until, but not later than, the Expiry Time unless withdrawn or
extended by Southern Acquisition.
The Offer is made only for the Neutrino Shares and not for any options,
warrants or other rights (the "Neutrino Options") to acquire Neutrino Shares.
Any holder of Neutrino Options who has not agreed to surrender them to Neutrino
and who wishes to accept the Offer should, to the extent permitted by the terms
thereof, exercise such Neutrino Options in order to obtain a certificate
representing Neutrino Shares and deposit the Neutrino Shares in accordance with
the Offer.
The obligation of Southern to take up and pay for Neutrino Shares
pursuant to the Offer is subject to certain conditions. See Section 4 of the
Offer, "Conditions of the Offer".
THE BOARD OF DIRECTORS OF NEUTRINO HAS UNANIMOUSLY ENDORSED THE MAKING
OF THE OFFER AND UNANIMOUSLY RECOMMENDS ACCEPTANCE OF THE OFFER BY THE
SHAREHOLDERS. NEUTRINO'S FINANCIAL ADVISOR HAS CONCLUDED THAT THE OFFER IS FAIR,
FROM A FINANCIAL POINT OF VIEW, TO THE SHAREHOLDERS. FOR FURTHER INFORMATION,
REFER TO THE DIRECTORS' CIRCULAR.
SOUTHERN ACQUISITION AND SOUTHERN
Southern Acquisition is a private company incorporated under the ABCA
and is a wholly-owned subsidiary of Southern. Southern is an independent oil and
gas company incorporated under the laws of Nevada and headquartered in Houston,
Texas. Southern is engaged in the acquisition, exploitation, exploration and
operation of oil and gas properties, primarily along the Gulf Coast, the
Mid-continent and in Canada, with a primary focus on the Gulf Coast Basin, both
onshore and offshore. Southern's business strategy is to increase reserves and
shareholder value through a balanced program of acquisitions, exploitation and
controlled risk exploration.
NEUTRINO
Neutrino is a public oil and gas company engaged primarily in the
acquisition of petroleum and natural gas rights and the exploration for and
development and production of oil and natural gas in western Canada. See
"Neutrino Resources Inc." in the Circular.
PURPOSE OF THE OFFER AND PLANS FOR NEUTRINO
The purpose of the Offer is to enable Southern Acquisition to acquire,
directly or indirectly, all of the outstanding Neutrino Shares.
If the Offer is successful, certain changes will be made to the
composition of the board of directors of Neutrino to allow the nominees of
Southern Acquisition to replace the current members of such Board. If Neutrino
becomes a wholly-owned subsidiary of Southern Acquisition, Southern Acquisition
may continue to operate Neutrino as a wholly-owned subsidiary, or Neutrino may
be amalgamated with or wound-up into Southern Acquisition or an affiliate of
Southern Acquisition.
If permitted by applicable law, subsequent to the completion of the
Offer and any compulsory acquisition or Subsequent Acquisition Transaction,
Southern Acquisition intends to delist the Neutrino Shares from the TSE and, if
there are fewer than 15 security holders of Neutrino, to cause Neutrino to cease
to be a reporting issuer under Canadian securities laws.
5
See "Purpose of the Offer and Plans for Neutrino" in the Circular.
BACKGROUND TO AND REASONS FOR THE OFFER
Southern's management considers strategic acquisition opportunities on
an ongoing basis. One of Southern's major corporate objectives is to increase
its Canadian oil and gas production through a combination of exploration and
selective acquisitions. The selective acquisition of quality properties is a key
component of Southern's strategy of positioning Southern for future growth. In
addition, Neutrino presented an attractive opportunity to use the expertise of
Neutrino's management team to guide the future growth of Southern in Canada. In
this regard, Southern has made contractual arrangements with the four senior
officers of Neutrino to ensure Neutrino's management team remains intact for a
minimum of 12 months following the completion of the Offer. See "Arrangements,
Agreements or Understandings" in the Circular.
Southern has the financial capability to fully develop and maximize the
value of Neutrino's assets. With the acquisition of Neutrino, Southern will have
a significant production base to complement and expand its Canadian oil and gas
property interests, all of which are currently held through its wholly-owned
subsidiary, Spruce Hills Production Company, Inc.
MERGER AGREEMENT
Southern and Neutrino entered into the Merger Agreement pursuant to
which Southern agreed to make, or cause a wholly-owned subsidiary to make, an
offer to purchase all of the outstanding Neutrino Shares. Under the Merger
Agreement, Neutrino confirmed to Southern that its board of directors had
approved the Offer and the Merger Agreement and had resolved to recommend
acceptance of the Offer to the Shareholders. Neutrino also agreed with Southern
that, among other things, it would not solicit, initiate or encourage the
initiation or continuation of any enquiries, discussions, negotiations,
proposals or offers from any Person in a manner which would be inconsistent with
the successful completion of the Offer. The foregoing does not prevent the board
of directors of Neutrino from discharging its fiduciary duties.
Southern is permitted under the Merger Agreement, in its sole
discretion, to amend or vary any term or condition of the Offer, provided that
Southern shall not, without the consent of Neutrino, waive or reduce the Minimum
Condition to below 50% of the outstanding Neutrino Shares, extend the Offer for
more than 35 days after the Expiry Date, decrease or change the consideration to
be paid for each Neutrino Share, or amend the Offer or modify its conditions in
a manner that is, in the opinion of Neutrino, acting reasonably, materially
adverse to the Shareholders.
Neutrino has agreed to pay to Southern a non-completion fee of
U.S.$2,000,000 in the event that, among other things: (i) any Person should,
prior to the Expiry Time, make a Superior Take-over Proposal which is completed
within 120 days of the expiry of the Offer; (ii) any Person should, prior to the
expiry of the Offer, take up and pay for more than 20% of the Neutrino Shares;
(iii) the board of directors of Neutrino withdraws its recommendation to the
Shareholders to accept the Offer and recommends acceptance of a competing offer;
or (iv) Neutrino enters into an agreement with any Person regarding a Take-over
Proposal. Any such payment shall be made within ten Business Days of the event
giving rise to the payment obligation.
Southern has entered into Lock-Up Agreements with the Tendering
Shareholders, who hold an aggregate of 10,489,543 (approximately 37.8% of the
issued Neutrino Shares). Under the terms of the Lock-Up Agreements, such
shareholders have agreed to tender, and not withdraw, all of their Neutrino
Shares to the Offer in accordance with the terms and conditions of the Offer,
unless the Merger Agreement is terminated or a Superior Take-over Proposal is
made and Southern does not match the Superior Take-over Proposal.
TIME FOR ACCEPTANCE
The Offer is open for acceptance until, but not later than, the Expiry
Time unless withdrawn by Southern Acquisition. The Offer may be otherwise
extended at Southern Acquisition's sole discretion.
See Section 5 of the Offer, "Extension and Variation of the Offer".
MANNER OF ACCEPTANCE
6
A Shareholder wishing to accept the Offer must deposit the certificate
or certificates representing their Neutrino Shares, together with a properly
completed and executed Letter of Transmittal or a manually executed facsimile
thereof and all other documents required by the Letter of Transmittal, at any
one of the offices of the Depositary specified in the Letter of Transmittal and
on the last page of this document, prior to the Expiry Time. Instructions are
contained in the Letter of Transmittal. SHAREHOLDERS WHOSE NEUTRINO SHARES ARE
REGISTERED IN THE NAME OF A NOMINEE SHOULD CONTACT THEIR STOCKBROKER, INVESTMENT
DEALER, BANK, TRUST COMPANY OR OTHER NOMINEE FOR ASSISTANCE IN DEPOSITING THEIR
NEUTRINO SHARES.
If the certificate or certificates representing Neutrino Shares are not
available for deposit prior to the Expiry Time, Shareholders may accept the
Offer by complying with the procedures for guaranteed delivery as set forth in
Section 3 of the Offer, "Manner of Acceptance".
CONDITIONS OF THE OFFER
Southern Acquisition reserves the right to withdraw the Offer and not
take up and pay for any Neutrino Shares deposited under the Offer unless the
conditions described in Section 4 of the Offer, "Conditions of the Offer", are
satisfied or waived by Southern Acquisition. The Offer is conditional upon,
among other things, there being validly deposited under the Offer and not
withdrawn prior to the Expiry Time and at the time Southern Acquisition first
takes up and pays for Neutrino Shares under the Offer at least 66 _% of the
outstanding Neutrino Shares (calculated on a fully diluted basis) other than
Neutrino Shares owned on the date of the Offer by Southern Acquisition, its
associates and affiliates. The conditions of the Offer are for the exclusive
benefit of Southern Acquisition and may be waived by it, in its sole discretion,
in whole or in part, at any time and from time to time, both before and after
the Expiry Time without prejudice to any other rights that Southern Acquisition
may have.
For a complete description of the conditions of the Offer, see Section 4
of the Offer, "Conditions of the Offer".
PAYMENT FOR DEPOSITED NEUTRINO SHARES
If all the conditions referred to in Section 4 of the Offer, "Conditions
of the Offer", are satisfied or waived by Southern Acquisition, Southern
Acquisition will (unless it shall have withdrawn or terminated the Offer) become
obligated to take up the Neutrino Shares validly deposited and not withdrawn
under the Offer not later than 10 days after the Expiry Date and pay for the
Neutrino Shares taken up as soon as possible, but in any event not later than 3
days after taking up the Neutrino Shares. Any Neutrino Shares deposited under
the Offer after the first day on which Neutrino Shares have been taken up by
Southern Acquisition will be taken up and paid for within 10 days of such
deposit. See Section 6 of the Offer, "Payment for Deposited Neutrino Shares".
ACQUISITION OF NEUTRINO SHARES NOT DEPOSITED
If Southern Acquisition takes up and pays for Neutrino Shares deposited
pursuant to the Offer, Southern Acquisition intends to seek to acquire, directly
or indirectly, all of the remaining Neutrino Shares not deposited under the
Offer by compulsory acquisition or a Subsequent Acquisition Transaction.
Southern Acquisition will cause the Neutrino Shares acquired under the Offer to
be voted in favour of a Subsequent Acquisition Transaction and, to the extent
permitted by applicable law, to be counted as part of any minority or
independent shareholder approval that may be required in connection with such a
transaction. If the Minimum Condition is satisfied, Southern Acquisition
believes it will own sufficient Neutrino Shares to effect such a Subsequent
Acquisition Transaction. See "Acquisition of Neutrino Shares Not Deposited" in
the Circular.
MARKET PRICE OF NEUTRINO SHARES
On May 12, 1998, the last trading day prior to the date of the public
announcement by Southern of its intention to make the Offer, the closing price
of the Neutrino Shares on the TSE was $1.41. Based on the closing price of $1.41
per Neutrino Share on May 12, 1998 the Offer represents a 27.7% premium over the
closing trading price of the Neutrino Shares on the TSE on May 12, 1998 and
represents a 23.4% premium to the 20 day weighted average closing price of the
Neutrino Shares prior to the announcement of the Offer. See "Price Range and
Trading Volume of Neutrino Shares" in the Circular.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
7
A disposition of Neutrino Shares for cash will give rise to a capital
gain or capital loss to the extent that the amount of cash received for the
Neutrino Shares exceeds, or is exceeded by, the aggregate of the adjusted cost
base of such shares and any reasonable costs of disposition. See "Canadian
Federal Income Tax Considerations" in the Circular.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
A disposition of Neutrino Shares for cash will require the recognition
of a gain or loss equal to the difference between the cash received and the tax
basis in the Neutrino Shares surrendered. See "United States Federal Income Tax
Considerations" in the Circular.
SOLICITING DEALER GROUP
Griffiths McBurney & Partners has been retained to act as the Dealer
Manager in connection with the Offer and to solicit acceptances of the Offer.
The Dealer Manager has undertaken to form a Soliciting Dealer Group comprising
members of the Investment Dealers Association of Canada, members of Canadian
stock exchanges in Canada and members of the National Association of Securities
Dealers, Inc. to solicit acceptances of the Offer. See "Soliciting Dealer Group"
in the Circular.
DEPOSITARY
Southern Acquisition has engaged Montreal Trust Company of Canada as the
Depositary for the receipt of certificates in respect of Neutrino Shares and
Letters of Transmittal deposited under the Offer. In addition, the Depositary
will receive Notices of Guaranteed Delivery deposited under the Offer at its
office in Toronto. The duties of the Depositary also include assisting in making
settlement under the Offer. See "Depositary" in the Circular.
No brokerage fees or commissions will be payable by any Shareholder who
deposits Neutrino Shares directly with the Depositary or who uses the services
of the Dealer Manager or a member of the Soliciting Dealer Group to accept the
Offer. Shareholders should contact the Dealer Manager, the Depositary, or a
broker or dealer for assistance in accepting the Offer and in depositing
Neutrino Shares with the Depositary. See "Soliciting Dealer Group" in the
Circular.
8
OFFER TO PURCHASE
TO: THE SHAREHOLDERS OF NEUTRINO RESOURCES INC.
1. THE OFFER
Southern Acquisition hereby offers to purchase, during the Offer Period,
on and subject to the terms and conditions hereinafter specified, all of the
issued and outstanding Neutrino Shares, including Neutrino Shares which may
become outstanding on the exercise of Neutrino Options, at a price of $1.80
(Canadian) in cash for each Neutrino Share.
THE OFFER IS MADE ONLY FOR NEUTRINO SHARES AND NOT FOR ANY NEUTRINO
OPTIONS. ANY HOLDER OF NEUTRINO OPTIONS WHO HAS NOT AGREED TO SURRENDER THEM TO
NEUTRINO AND WHO WISHES TO ACCEPT THE OFFER SHOULD, TO THE EXTENT PERMITTED BY
THE TERMS THEREOF, EXERCISE SUCH OPTIONS IN ORDER TO OBTAIN CERTIFICATES
REPRESENTING NEUTRINO SHARES AND DEPOSIT THE NEUTRINO SHARES IN ACCORDANCE WITH
THE OFFER.
Depositing Shareholders will not be obliged to pay brokerage fees or
commissions if they accept the Offer by depositing their Neutrino Shares
directly with the Depositary or if they use the services of the Dealer Manager
or a member of the Soliciting Dealer Group to accept the Offer. See "Soliciting
Dealer Group" and "Depositary" in the Circular.
THE ACCOMPANYING CIRCULAR IS INCORPORATED INTO AND FORMS PART OF THE
OFFER AND CONTAINS IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE
MAKING A DECISION WITH RESPECT TO THE OFFER.
2. TIME FOR ACCEPTANCE
The Offer is open for acceptance until, but not later than, the Expiry
Time unless withdrawn by Southern Acquisition. The Offer may also be extended at
Southern Acquisition's sole discretion. See Section 5 of the Offer, "Extension
and Variation of the Offer".
3. MANNER OF ACCEPTANCE
LETTER OF TRANSMITTAL
The Offer may be accepted by holders of Neutrino Shares delivering to
the Depositary at any one of the offices of the Depositary listed in the Letter
of Transmittal and on the last page of this document so as to arrive there prior
to the Expiry Time:
a. the certificate or certificates representing the Neutrino Shares in
respect of which the Offer is being accepted;
b. the Letter of Transmittal, or a manually executed facsimile thereof,
properly completed and duly executed as required by the instructions set
out in the Letter of Transmittal; and
c. any other documents required by the instructions set out in the Letter
of Transmittal.
If the certificate or certificates representing Neutrino Shares are not
available for deposit prior to the Expiry Time, Shareholders may accept the
Offer by complying with the procedure for guaranteed delivery set forth below.
Except as otherwise provided in the instructions in the Letter of
Transmittal, all signatures on the Letter of Transmittal and on certificates
representing Neutrino Shares and, if necessary, on the Notice of Guaranteed
Delivery, must be guaranteed by an Eligible Institution, unless less than 50
Neutrino Shares are being deposited under the Offer. If the Letter of
Transmittal is executed by a person other than the registered owner(s) of the
Neutrino Shares deposited therewith, and in certain other circumstances as set
forth in the Letter of Transmittal, then the certificate(s) must be endorsed or
be accompanied by an appropriate share transfer power of attorney duly and
properly completed by the registered owner(s). The signature(s) on the
endorsement panel or share transfer power of attorney must be guaranteed by an
Eligible Institution.
9
PROCEDURE FOR GUARANTEED DELIVERY
If a Shareholder wishes to deposit Neutrino Shares pursuant to the Offer
and: (i) the certificate or certificates representing such Neutrino Shares are
not immediately available; or (ii) such Shareholder cannot deliver the
certificate or certificates representing such Neutrino Shares and all other
required documents to the Depositary prior to the Expiry Time, such Neutrino
Shares may nevertheless be deposited pursuant to the Offer provided that all of
the following conditions are met:
a. such deposit is made by or through an Eligible Institution;
b. a properly completed and duly executed Notice of Guaranteed Delivery, or
a manually executed facsimile thereof, is received by the Depositary at
its office in Toronto, as set forth in the Notice of Guaranteed
Delivery, prior to the Expiry Time; and
c. the certificate or certificates representing deposited Neutrino Shares
in proper form for transfer, together with a properly completed and duly
executed Letter of Transmittal, or manually executed facsimile thereof,
covering the Neutrino Shares and all other documents required by the
Letter of Transmittal, are received by the Depositary at its office in
Toronto as set forth in the Letter of Transmittal on or before 5:00 p.m.
(Toronto time) on the third trading day on the TSE after the Expiry
Date.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mailed to the Depositary so as to be received by the
Depositary at its office in Toronto prior to the Expiry Time and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
GENERAL
In all cases, payment for Neutrino Shares deposited and taken up by
Southern Acquisition pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates representing the Neutrino Shares
together with a properly completed and duly executed Letter of Transmittal, or a
manually executed facsimile thereof, covering such Neutrino Shares and any other
required documents, with the signatures guaranteed, if required, in accordance
with the instructions set out in the Letter of Transmittal.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL, CERTIFICATES
REPRESENTING THE NEUTRINO SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE PERSON DEPOSITING THE SAME. SOUTHERN ACQUISITION
RECOMMENDS THAT SUCH DOCUMENTS BE DELIVERED BY HAND TO THE DEPOSITARY AND A
RECEIPT OBTAINED. IF SUCH DOCUMENTS ARE MAILED, SOUTHERN ACQUISITION RECOMMENDS
THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED BE USED AND THAT PROPER
INSURANCE BE OBTAINED.
SHAREHOLDERS WHOSE NEUTRINO SHARES ARE REGISTERED IN THE NAME OF A
NOMINEE SHOULD CONTACT THEIR STOCKBROKER, INVESTMENT DEALER, BANK, TRUST COMPANY
OR OTHER NOMINEE FOR ASSISTANCE IN DEPOSITING THEIR NEUTRINO SHARES.
Except as otherwise provided, the Offer will be deemed to have been
accepted when the Depositary has actually received certificates in respect of
the Neutrino Shares and the related Letter of Transmittal duly completed and
executed.
The execution of a Letter of Transmittal by a Shareholder irrevocably
constitutes and appoints the Depositary and any officer of Southern Acquisition,
and each of them, and any other person designated by Southern Acquisition in
writing, as the true and lawful agent, attorney and attorney-in-fact and proxy
of such Shareholder with respect to the Neutrino Shares deposited under the
Letter of Transmittal which are taken up and paid for under the Offer (the
"Purchased Securities") and with respect to any and all dividends,
distributions, payments, securities, rights, assets or other interests declared,
paid, issued, distributed, made or transferred on or in respect of the Purchased
Securities on or after May 13, 1998 (collectively, the "Other Securities"),
effective on and after the date that Southern Acquisition takes up and pays for
the Purchased Securities (the "Effective Date"), with full power of
substitution, in the name and on behalf of such Shareholder (such power of
attorney being deemed to be an irrevocable power coupled with an interest): (a)
to register or record, transfer and enter the transfer of Purchased Securities
and any Other Securities on the
10
appropriate register of holders maintained by Neutrino; and (b) except as
otherwise may be agreed, to exercise any and all of the rights of the holder of
the Purchased Securities and Other Securities including, without limitation, to
vote, execute and deliver any and all instruments of proxy, authorizations or
consents in respect of any or all of the Purchased Securities and Other
Securities, revoke any such instrument, authorization or consent given prior to,
on or after the Effective Date, designate in any such instruments of proxy any
person or persons as the proxy or the proxy nominee or nominees of such
Shareholder in respect of such Purchased Securities and Other Securities for all
purposes including, without limitation, in connection with any meeting (whether
annual, special or otherwise and any adjournments thereof) of holders of
securities of Neutrino, and execute, endorse and negotiate, for and in the name
of and on behalf of the registered holder of Purchased Securities and Other
Securities, any and all cheques or other instruments respecting any distribution
payable to or to the order of such holder in respect of such Purchased
Securities and Other Securities. Furthermore, a holder of Purchased Securities
or Other Securities who executes a Letter of Transmittal agrees, effective on
and after the Effective Date, not to vote any of the Purchased Securities or
Other Securities at any meeting (whether annual, special or otherwise and any
adjournments thereof) of holders of securities of Neutrino and, except as may
otherwise be agreed, not to exercise any and all of the other rights or
privileges attached to the Purchased Securities or Other Securities, and agrees
to execute and deliver to Southern Acquisition any and all instruments of proxy,
authorizations or consents in respect of the Purchased Securities or Other
Securities and to designate in any such instruments of proxy the person or
persons specified by Southern Acquisition as the proxy or proxy nominee or
nominees of the holder of the Purchased Securities or Other Securities. Upon
such appointment, all prior proxies given by the holder of such Purchased
Securities or Other Securities with respect thereto shall be revoked and no
subsequent proxies may be given by such person with respect thereto. A holder of
Purchased Securities or Other Securities who executes a Letter of Transmittal
covenants to execute, upon request, any additional documents, transfers and
other assurances as may be necessary or desirable to complete the sale,
assignment and transfer of the Purchased Securities and Other Securities to
Southern Acquisition and acknowledges that all authority therein conferred or
agreed to be conferred shall survive the death or incapacity, bankruptcy or
insolvency of the holder and all obligations of the holder therein shall be
binding upon the heirs, personal representatives, successors and assigns of the
holder.
The deposit of Neutrino Shares pursuant to the procedures herein will
constitute a binding agreement between the depositing Shareholder and Southern
Acquisition upon the terms and subject to the conditions of the Offer, including
the depositing Shareholder's representation and warranty that: (i) such
Shareholder has full power and authority to deposit, sell, assign and transfer
the Neutrino Shares (and any Other Securities) being deposited and has not sold,
assigned or transferred or agreed to sell, assign or transfer any of such
Neutrino Shares (and Other Securities) to any other person; (ii) such
Shareholder owns the Neutrino Shares (and any Other Securities) being deposited
within the meaning of applicable securities laws; (iii) the deposit of such
Neutrino Shares (and any Other Securities) complies with applicable securities
laws; and (iv) when such Neutrino Shares (and any Other Securities) are taken up
and paid for by Southern Acquisition, Southern Acquisition will acquire good
title thereto free and clear of all liens, restrictions, charges, encumbrances,
claims and equities whatsoever.
All questions as to validity, form, eligibility (including timely
receipt) and acceptance of any Neutrino Shares deposited pursuant to the Offer
will be determined by Southern Acquisition in its sole discretion. Depositing
Shareholders agree that such determinations shall be final and binding. Southern
Acquisition reserves the absolute right to reject any and all deposits which it
determines not to be in a proper form or which, in the opinion of its counsel,
may be unlawful to accept under the laws of any applicable jurisdiction.
Southern Acquisition reserves the absolute right to waive any defect or
irregularity in the deposit of any Neutrino Shares. There shall be no duty or
obligation on Southern Acquisition, the Dealer Manager, the Depositary, or any
other person to give notice of any defect or irregularity in any deposit and no
liability shall be incurred by any of them for failure to give any such notice.
Southern Acquisition's interpretation of the terms and conditions of the Offer
(including the Circular, the Letter of Transmittal and the Notice of Guaranteed
Delivery) shall be final and binding.
Southern Acquisition reserves the right to permit the Offer to be
accepted in a manner other than that set forth above.
4. CONDITIONS OF THE OFFER
Southern Acquisition reserves the right to withdraw or terminate the
Offer and not take up and pay for, or to extend the period of time during which
the Offer is open and postpone taking up and paying for, any Neutrino Shares
11
deposited under the Offer unless all of the following conditions are satisfied
or waived by Southern Acquisition:
a. prior to the Expiry Time, and at the time Southern Acquisition first
takes up and pays for Neutrino Shares under the Offer, there shall have
been validly deposited under the Offer and not withdrawn at least 66_%
of the outstanding Neutrino Shares (calculated on a fully diluted basis)
other than Neutrino Shares owned on the date of the Offer by Southern
Acquisition, its associates and affiliates;
b. all requisite regulatory approvals and consents (including, without
limitation, those of any stock exchanges or other securities or
regulatory authorities) shall have been obtained on terms and conditions
satisfactory to Southern Acquisition in its sole judgment, acting
reasonably;
c. (i) no act, action, suit, proceeding, objection or opposition shall have
been threatened or taken before or by any domestic or foreign court or
tribunal or governmental agency or other regulatory authority or
administrative agency or commission by any elected or appointed public
official or by any private person in Canada or elsewhere, whether or not
having the force of law; and (ii) no law, regulation or policy
(including applicable tax laws and regulations in those jurisdictions in
which Neutrino carries on business) shall have been proposed, enacted,
promulgated, amended or applied, which:
(A) has the effect or may have the effect to cease trade, enjoin,
prohibit or impose material limitations, damages or conditions on
the purchase by, or the sale to, Southern Acquisition of the
Neutrino Shares or the right of Southern Acquisition to own or
exercise full rights of ownership of the Neutrino Shares; or
(B) if the Offer was consummated, would materially and adversely affect
Neutrino;
d. Southern Acquisition shall have determined in its sole judgment, acting
reasonably, that Neutrino has not taken any action which might make it
inadvisable for Southern Acquisition to proceed with the Offer and/or
with the taking up and paying for Neutrino Shares under the Offer,
including, without limiting the generality of the foregoing, any
agreement or understanding relating to the sale, disposition of or other
dealing with any of the assets of Neutrino;
e. the Tendering Shareholders shall not be in default, in any material
respect, of any of their obligations under the Lock-up Agreements, the
representations and warranties made by the Tendering Shareholders in the
Lock-up Agreements shall be true in all material respects as of the
first date of the take up and payment for Neutrino Shares under the
Offer, and the Lock-up Agreements shall not have been otherwise
terminated;
f. there shall not have occurred (or, if there shall have occurred prior to
May 29, 1998, there shall have been disclosed, generally or to Southern
Acquisition, prior to the commencement of the Offer) any change (or any
condition, event or development involving a prospective change) in the
business, operations, assets, capitalization, financial condition,
prospects, licenses, permits, rights, privileges or liabilities whether
contractual or otherwise, of Neutrino which, in the sole judgment of
Southern Acquisition acting reasonably, is a Material Adverse Change;
g. there shall have not developed, occurred or come into effect or
existence any event, action, state, condition, or other occurrence
(financial, political, industrial, economic or otherwise) of national or
international consequence or any action, law or regulation, inquiry or
other occurrence of any nature whatsoever which, in the opinion of
Southern Acquisition, materially adversely affects or involves or may
materially adversely affect or involve the financial condition,
business, operations, assets, affairs or prospects of Neutrino;
h. all options, warrants or rights to acquire Neutrino Shares issued or
granted by Neutrino shall have been exercised or cancelled, shall
otherwise have ceased to exist or to represent a liability or obligation
of Neutrino, or shall have been dealt with to the satisfaction of
Southern Acquisition, acting reasonably;
i. there shall not have occurred any breach or non-compliance by Neutrino
of the Merger Agreement in any material respect and the representations
and warranties contained therein shall be accurate in all material
respects, subject only to the occurrence of the transactions
contemplated in the Merger Agreement; and
12
j. there shall not exist any prohibition at law against Southern
Acquisition making the Offer or taking up and paying for all of the
Neutrino Shares under the Offer or completing any compulsory acquisition
or Subsequent Acquisition Transaction.
The foregoing conditions are for the exclusive benefit of Southern
Acquisition. Southern Acquisition may assert any of the foregoing conditions at
any time, both before and after the Expiry Time, regardless of the circumstances
giving rise to such assertion (including the action or inaction of Southern
Acquisition). Southern Acquisition may waive any of the foregoing conditions, in
whole or in part, at any time and from time to time, both before and after the
Expiry Time, in its discretion (subject to the Merger Agreement) without
prejudice to any other rights which Southern Acquisition may have. The failure
by Southern Acquisition at any time to exercise or assert any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be exercised or asserted at any time and
from time to time. Any determination by Southern Acquisition concerning the
events described in this Section 4 will be final and binding upon all parties.
Any waiver of a condition or the withdrawal of the Offer shall be
effective upon written notice or other communication confirmed in writing by
Southern Acquisition to that effect to the Depositary at its principal office in
Calgary, Alberta. Southern Acquisition, forthwith after giving any such notice,
shall make a public announcement of such waiver or withdrawal, shall cause the
Depositary, if required by law, as soon as practicable thereafter to notify the
Shareholders in the manner set forth in Section 11 of the Offer, "Notice", and
shall provide a copy of the aforementioned notice to the TSE. If the Offer is
withdrawn, Southern Acquisition shall not be obligated to take up and pay for
any Neutrino Shares deposited under such Offer and all certificates for
deposited Neutrino Shares, Letters of Transmittal, Notices of Guaranteed
Delivery and related documents will be promptly returned to the parties by whom
they were deposited.
5. EXTENSION AND VARIATION OF THE OFFER
The Offer is open for acceptance until, but not after, the Expiry Time,
subject to extension or variation in Southern Acquisition's sole discretion.
Southern Acquisition reserves the right, in its sole discretion (subject
to the Merger Agreement), at any time and from time to time during the Offer
Period (or otherwise as permitted by applicable law), to extend the Offer by
fixing a new Expiry Time or to vary the terms of the Offer, in each case by
giving written notice (or other communication confirmed in writing) of such
extension or variation to the Depositary at its principal office in Calgary,
Alberta. Southern Acquisition, forthwith after giving any such notice or
communication, shall make a public announcement of the extension or variation,
shall cause the Depositary as soon as practicable thereafter to provide a copy
of such notice or communication in the manner set forth in Section 11 of the
Offer, "Notice", to all Shareholders whose Neutrino Shares have not been taken
up at the date of the extension or variation and shall provide a copy of the
aforementioned notice to the TSE. Any notice of extension or variation will be
deemed to have been given and to be effective on the day on which it is
delivered or otherwise communicated to the Depositary at its principal office in
Calgary, Alberta.
Notwithstanding the foregoing, the Offer may not be extended by Southern
Acquisition if all of the terms and conditions of the Offer, excluding those
waived by Southern Acquisition, have been fulfilled or complied with unless
Southern Acquisition first takes up and pays for all of the Neutrino Shares
deposited under the Offer and not withdrawn.
Where the terms of the Offer are varied, the Offer shall not expire
before 10 days after the notice of variation in respect of such variation has
been given to Shareholders unless otherwise permitted by applicable law and
subject to any abridgement or elimination of that period pursuant to such orders
as may be granted by Canadian securities regulatory authorities.
During any such extension or in the event of any variation, all Neutrino
Shares previously deposited and not taken up or withdrawn will remain subject to
the Offer and may be accepted for purchase by Southern Acquisition in accordance
with the terms hereof, subject to Section 7 of the Offer, "Withdrawal of
Deposited Neutrino Shares". An extension of the Offer Period or a variation of
the Offer does not constitute a waiver by Southern Acquisition of its rights
under Section 4 of the Offer, "Conditions of the Offer". If the consideration
being offered for the Neutrino
13
Shares under the Offer is increased, the increased consideration will be paid to
all depositing Shareholders whose Neutrino Shares are taken up under the Offer.
6. PAYMENT FOR DEPOSITED NEUTRINO SHARES
If all the conditions referred to under Section 4 of the Offer,
"Conditions of the Offer", have been satisfied or waived by Southern
Acquisition, Southern Acquisition has agreed to take up and pay for Neutrino
Shares validly deposited (and not withdrawn) under the Offer as soon as
practicable in the circumstances. In accordance with applicable law, any
Neutrino Shares deposited under the Offer after the first date on which Neutrino
Shares have been taken up by Southern Acquisition are required to be taken up
and paid for within 10 days of such deposit.
Subject to applicable law, Southern Acquisition expressly reserves the
right in its sole discretion to delay taking up or paying for any Neutrino
Shares or to terminate the Offer and not take up or pay for any Neutrino Shares
if any condition specified in Section 4 of the Offer, "Conditions of the Offer",
is not satisfied or waived by Southern Acquisition, in whole or in part, by
giving written notice thereof or other communication confirmed in writing to the
Depositary at its principal office in Calgary, Alberta. Southern Acquisition
also expressly reserves the right, in its sole discretion and notwithstanding
any other condition of the Offer, to delay taking up and paying for Neutrino
Shares in order to comply, in whole or in part, with any applicable law,
including, without limitation, such period of time as may be necessary to obtain
any necessary regulatory approval. Southern Acquisition will not, however, take
up and pay for any Neutrino Shares deposited under the Offer unless it
simultaneously takes up and pays for all Neutrino Shares then validly deposited
under the Offer. Southern Acquisition will be deemed to have taken up and
accepted for payment Neutrino Shares validly deposited and not withdrawn
pursuant to the Offer if, as and when Southern Acquisition gives written notice
or other communication confirmed in writing to the Depositary at its principal
office in Calgary, Alberta of its acceptance for payment of such Neutrino Shares
pursuant to the Offer.
Southern Acquisition will pay for Neutrino Shares validly deposited
under the Offer and not withdrawn by providing the Depositary with sufficient
funds (by bank transfer or other means satisfactory to the Depositary) to pay
the price per share set forth in Section 1 of the Offer. Under no circumstances
will interest accrue or be paid by Southern Acquisition or the Depositary to
persons depositing Neutrino Shares on the purchase price of Neutrino Shares
purchased by Southern Acquisition, regardless of any delay in making such
payment. The Depositary will act as the agent of persons who have deposited
Neutrino Shares in acceptance of the Offer for the purposes of receiving payment
from Southern Acquisition and transmitting payment to such persons, and receipt
of payment by the Depositary will be deemed to constitute receipt of payment by
Shareholders who have deposited and not withdrawn their Neutrino Shares pursuant
to the Offer.
Settlement will be made by the Depositary issuing or causing to be
issued a cheque payable in Canadian funds to which that Shareholder is entitled.
Subject to the foregoing and unless otherwise directed by the Letter of
Transmittal, the cheque will be issued in the name of the registered holder of
the Neutrino Shares deposited. Unless the person depositing the Neutrino Shares
instructs the Depositary to hold the cheque for pick-up by checking the
appropriate box in the Letter of Transmittal, cheques will be forwarded by first
class insured mail to such persons at the address specified in the Letter of
Transmittal. If no address is specified, cheques will be forwarded to the
address of the Shareholder as shown on the registers maintained by Neutrino.
Pursuant to applicable law, Southern Acquisition may, in certain circumstances,
be required to make withholdings from the amount otherwise payable to a
Shareholder. See "Canadian Federal Income Tax Considerations" in the Circular.
If any deposited Neutrino Shares are not accepted for payment pursuant
to the terms and conditions of the Offer for any reason, or if certificates are
submitted for more Neutrino Shares than the Shareholder wishes to deposit, a
certificate for Neutrino Shares not purchased will be returned, without expense,
to the depositing Shareholder as soon as practicable following the Expiry Time
or withdrawal or early termination of the Offer.
Depositing Shareholders will not be obligated to pay any brokerage fees
or commissions if they accept the Offer by depositing their Neutrino Shares
directly with the Depositary or if they use the services of the Dealer Manager
or a member of the Soliciting Dealer Group to accept the Offer. See "Depositary"
and "Soliciting Dealer Group" in the Circular.
7. WITHDRAWAL OF DEPOSITED NEUTRINO SHARES
14
All deposits of Neutrino Shares pursuant to the Offer are irrevocable,
provided that any Neutrino Shares deposited in acceptance of the Offer may be
withdrawn by or on behalf of the depositing Shareholder (unless otherwise
required or permitted by applicable law):
a. at any time before June 22, 1998; and
b. at any time after July 13, 1998 provided that the Neutrino Shares have
not been taken up and paid for by Southern Acquisition prior to the
receipt by the Depositary of the notice of withdrawal in respect of such
Neutrino Shares.
In addition, if:
c. there is a variation of the terms of the Offer before the Expiry Time
(including any extension of the period during which the Neutrino Shares
may be deposited hereunder or the modification of a term or condition of
the Offer, but excluding, unless otherwise required by applicable law,
(i) a variation consisting solely of an increase in the consideration
offered where the time for deposit is not extended for more than 10 days
after the notice of variation has been delivered) or (ii) a variation
consisting solely of the waiver of a condition of the Offer (other than
the Minimum Condition)); or
d. at or before the Expiry Time or after the Expiry Time but not before the
expiry of all rights of withdrawal in respect of the Offer, a change
occurs in the information contained in the Offer or the Circular, as
amended from time to time, that would reasonably be expected to affect
the decision of a Shareholder to accept or reject the Offer, unless such
change is not within the control of Southern Acquisition or any of its
affiliates;
any Neutrino Shares deposited under the Offer and not taken up and paid for by
Southern at such time may be withdrawn by or on behalf of the depositing
Shareholder at the place of deposit at any time until the expiration of 10 days
after the date upon which a notice of such variation or change is mailed,
delivered or otherwise communicated, subject to abridgement of that period
pursuant to such order or orders as may be granted by Canadian courts or
securities regulatory authorities.
In order for any withdrawal to be made, notice of withdrawal must be in
writing (which includes a telegraphic communication or notice by electronic
means that produces a printed copy), and must be actually received by the
Depositary at the place of deposit of the applicable Neutrino Shares (or Notice
of Guaranteed Delivery in respect thereof) within the period permitted for
withdrawal. Any such notice of withdrawal must be: (i) signed by or on behalf of
the person who signed the Letter of Transmittal that accompanied the Neutrino
Shares to be withdrawn (or Notice of Guaranteed Delivery in respect thereof);
and (ii) specify such person's name, the number of Neutrino Shares to be
withdrawn, the name of the registered holder and the certificate number shown on
each certificate representing the Neutrino Shares to be withdrawn. Any signature
on a notice of withdrawal must be guaranteed by an Eligible Institution in the
same manner as in the Letter of Transmittal (as described in the instructions
set out in such letter), except in the case of Neutrino Shares deposited for the
account of an Eligible Institution. The withdrawal shall take effect upon
receipt of the written notice by the Depositary.
All questions as to the validity (including timely receipt) and form of
notices of withdrawal shall be determined by Southern Acquisition, in its sole
discretion, and such determinations shall be final and binding. There shall be
no duty or obligation on Southern Acquisition, the Dealer Manager, the
Depositary, or any other person to give notice of any defect or irregularity in
any notice of withdrawal and no liability shall be incurred by any of them for
failure to give any such notice.
If Southern Acquisition extends the Offer, is delayed in taking up or
paying for Neutrino Shares or is unable to take up or pay for Neutrino Shares
for any reason, then, without prejudice to Southern Acquisition's other rights,
Neutrino Shares deposited under the Offer may be retained by the Depositary on
behalf of Southern Acquisition subject to the depositing holder's right of
withdrawal as set forth under this Section 7 of the Offer, or pursuant to
applicable law.
Withdrawals may not be rescinded and any Neutrino Shares withdrawn will
be deemed not validly deposited
15
for the purposes of the Offer, but may be redeposited at any subsequent time
prior to the Expiry Time by following any of the applicable procedures described
in Section 3 of the Offer, "Manner of Acceptance".
In addition to the foregoing rights of withdrawal, Shareholders in
certain provinces of Canada are entitled to statutory rights of rescission in
certain circumstances. See "Statutory Rights" in the Circular.
8. RETURN OF DEPOSITED NEUTRINO SHARES
If any deposited Neutrino Shares are not taken up and paid for by
Southern Acquisition under the Offer for any reason whatsoever, or if
certificates are submitted by a Shareholder for more Neutrino Shares than are
deposited, certificates for Neutrino Shares not taken up and paid for or not
deposited will be returned at the expense of Southern Acquisition by either
sending new certificates representing Neutrino Shares not purchased or returning
the deposited certificates and other relevant documents. The certificates and
other relevant documents will be forwarded by first class insured mail in the
name of and to the address of the depositing Shareholder specified in the Letter
of Transmittal or, if no such name or address is so specified, then in such name
and to such address of such Shareholder as shown on the registers maintained by
Neutrino as soon as practicable following the Expiry Time or withdrawal or
termination of the Offer.
9. CHANGES IN CAPITALIZATION, DISTRIBUTIONS AND LIENS
If, on or after May 13, 1998, Neutrino should subdivide, consolidate or
otherwise change any of the Neutrino Shares or its capitalization, or disclose
that it has taken or intends to take any such action, Southern Acquisition may,
in its sole discretion, and without prejudice to its rights under Section 4,
"Conditions of the Offer", make such adjustments as it considers appropriate to
the terms of the Offer (including, without limitation, the type of securities
offered to be purchased and the amounts payable therefor) to reflect such
subdivision, consolidation or other change.
Neutrino Shares acquired pursuant to the Offer shall be transferred by
the Shareholder and acquired by Southern Acquisition free and clear of all
liens, restrictions, charges, encumbrances, claims and equities and together
with all rights and benefits arising therefrom including the right to any and
all dividends, distributions, payments, securities, rights, assets or other
interests which may be declared, paid, issued, distributed, made or transferred
on or in respect of the Neutrino Shares on or after May 13, 1998. If Neutrino
should declare or pay any cash dividend, stock dividend or make any other
distribution on or issue any rights with respect to any of the Neutrino Shares
which is or are payable or distributable to the Shareholders of record on a
record date which is prior to the date of transfer into the name of Southern
Acquisition or its nominees or transferees on the registers maintained by
Neutrino of such Neutrino Shares following acceptance thereof for purchase
pursuant to the Offer, then the whole of any such dividend, distribution,
payment, security, right, asset or other interest will be received and held by
the depositing Shareholder for the account of Southern Acquisition and shall be
promptly remitted and transferred by the depositing Shareholder to the
Depositary for the account of Southern Acquisition, accompanied by appropriate
documentation of transfer. Pending such remittance, Southern Acquisition will be
entitled to all rights and privileges as the owner of any such dividend,
distribution, payment, security, right, asset or other interest, and may
withhold the entire consideration payable by Southern Acquisition pursuant to
the Offer or deduct from the consideration payable by Southern Acquisition
pursuant to the Offer the amount or value thereof, as determined by Southern
Acquisition in its sole discretion.
10. MAIL SERVICE INTERRUPTION
Notwithstanding the provisions of the Offer, the Circular, the Letter of
Transmittal or the Notice of Guaranteed Delivery, cheques in payment for
Neutrino Shares purchased under the Offer and certificates representing Neutrino
Shares to be returned will not be mailed if Southern Acquisition determines that
delivery thereof by mail may be delayed. Persons entitled to cheques which are
not mailed for the foregoing reason may take delivery thereof at the office of
the Depositary at which the deposited certificates representing Neutrino Shares
in respect of which the cheques are being issued were deposited upon application
to the Depositary, until such time as Southern Acquisition has determined that
delivery by mail will no longer be delayed. Southern Acquisition shall provide
notice of any such determination not to mail made under this Section 10 as soon
as reasonably practicable after the making of such determination and in
accordance with Section 11 of the Offer, "Notice". Notwithstanding Section 6 of
the Offer, "Payment for Deposited Neutrino Shares", the deposit of cheques with
the Depositary for delivery to the depositing
16
Shareholders in such circumstances shall constitute delivery to the persons
entitled thereto and the Neutrino Shares shall be deemed to have been paid for
immediately upon such deposit.
11. NOTICE
Without limiting any other lawful means of giving notice, any notice
which may be given or caused to be given by Southern Acquisition or the
Depositary under the Offer will be deemed to have been properly given if it is
mailed by first class mail, postage prepaid, to the registered Shareholders at
their addresses as shown on the registers maintained by Neutrino and will be
deemed to have been received on the first day following the date of mailing
which is a Business Day. These provisions apply notwithstanding any accidental
omission to give notice to any one or more Shareholders and notwithstanding any
interruption of postal service in Canada or the United States following mailing.
In the event of any interruption of postal service following mailing, Southern
Acquisition intends to make reasonable efforts to disseminate the notice by
other means, such as publication. Except as otherwise required or permitted by
law, if post offices in Canada or the United States or elsewhere are not open
for the deposit of mail or there is reason to believe there is or could be a
disruption in all or part of the postal service, any notice which Southern
Acquisition or the Depositary may give or cause to be given under the Offer,
except as otherwise provided herein, will be deemed to have been properly given
and to have been received by holders of Neutrino Shares if: (i) it is given to
the TSE for dissemination through its facilities; (ii) it is published once in
the National Edition of THE GLOBE AND MAIL and in daily newspapers of general
circulation in each of the French and English language in the City of Montreal,
provided that if the National Edition of THE GLOBE AND MAIL is not being
generally circulated, publication thereof shall be made in THE FINANCIAL POST or
any other daily newspaper of general circulation published in the cities of
Toronto and Calgary; and (iii) it is provided to the Dow Jones News Service for
distribution.
Wherever the Offer calls for documents to be delivered to the
Depositary, such documents will not be considered delivered unless and until
they have been physically received at one of the addresses listed for the
Depositary in the Letter of Transmittal or Notice of Guaranteed Delivery, as
applicable. Wherever the Offer calls for documents to be delivered to a
particular office of the Depositary, such documents will not be considered
delivered unless and until they have been physically received at that particular
office at the address listed in the Letter of Transmittal or Notice of
Guaranteed Delivery, as applicable.
12. ACQUISITION OF NEUTRINO SHARES NOT DEPOSITED
If Southern Acquisition takes up and pays for Neutrino Shares deposited
under the Offer, Southern Acquisition intends to seek to acquire, directly or
indirectly, all of the remaining Neutrino Shares not deposited under the Offer
by compulsory acquisition or a Subsequent Acquisition Transaction. Southern
Acquisition will cause the Neutrino Shares acquired under the Offer to be voted
in favour of a Subsequent Acquisition Transaction and, to the extent permitted
by law, to be counted as part of any minority approval that may be required in
connection with such a transaction. If the Minimum Condition is satisfied,
Southern Acquisition believes that it will own sufficient Neutrino Shares to
effect such a Subsequent Acquisition Transaction. See "Acquisition of Neutrino
Shares Not Deposited" in the Circular.
13. MARKET PURCHASES AND SALES OF NEUTRINO SHARES
Southern Acquisition reserves the right to, and may, acquire (or cause
an affiliate to acquire) Neutrino Shares by making purchases through the
facilities of the TSE, subject to applicable law, at any time and from time to
time prior to the Expiry Time. In no event will Southern Acquisition make any
such purchases of Neutrino Shares through the facilities of the TSE before the
third Business Day following the date of the Offer. If Southern Acquisition
should acquire Neutrino Shares by making purchases through the facilities of the
TSE during the Offer Period, the Neutrino Shares so purchased shall be counted
in any determination as to whether the Minimum Condition has been satisfied. The
aggregate number of Neutrino Shares acquired by Southern Acquisition through the
facilities of the TSE during the Offer Period shall not exceed 5% of the
outstanding Neutrino Shares as of the date of the Offer.
Although Southern Acquisition has no present intention to sell Neutrino
Shares taken up under the Offer, it reserves the right to make or enter into an
arrangement, commitment or understanding at or prior to the Expiry Time to sell
any of such Neutrino Shares after the Expiry Time.
17
14. OTHER TERMS OF THE OFFER
THE PROVISIONS OF THE CIRCULAR ACCOMPANYING THE OFFER FORM PART OF THE
TERMS AND CONDITIONS OF THE OFFER AND SHOULD BE READ CAREFULLY BEFORE MAKING A
DECISION WITH RESPECT TO THE OFFER.
The Offer and all contracts resulting from the acceptance of the Offer
shall be governed by and construed in accordance with the laws of the Province
of Alberta and all laws of Canada applicable therein. Each party to any
agreement resulting from the acceptance of this Offer unconditionally and
irrevocably attorns to the non-exclusive jurisdiction of the courts of the
Province of Alberta and the courts of appeal therefrom.
NO BROKER, DEALER OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF SOUTHERN ACQUISITION
OTHER THAN AS CONTAINED IN THIS OFFER OR IN THE CIRCULAR, LETTER OF TRANSMITTAL
OR NOTICE OF GUARANTEED DELIVERY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NO BROKER,
DEALER OR OTHER PERSON SHALL BE DEEMED TO BE THE AGENT OF SOUTHERN ACQUISITION,
THE DEALER MANAGER OR THE DEPOSITARY FOR THE PURPOSES OF THE OFFER. IN ANY
JURISDICTION IN WHICH THE OFFER IS REQUIRED TO BE MADE BY A LICENSED BROKER OR
DEALER, THE OFFER SHALL BE MADE ON BEHALF OF SOUTHERN ACQUISITION BY BROKERS OR
DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
Southern Acquisition shall, in its sole discretion, be entitled to make
a final and binding determination of all questions relating to the
interpretation of the Offer, the Circular, the Letter of Transmittal or the
Notice of Guaranteed Delivery, the validity of any acceptance of this Offer and
any withdrawals of Neutrino Shares, including, without limitation, the
satisfaction or non-satisfaction of any condition, the validity, time and effect
of any deposit of Neutrino Shares or notice of withdrawal of Neutrino Shares,
and the due completion and execution of the Letters of Transmittal and Notices
of Guaranteed Delivery. Southern Acquisition reserves the right to waive any
defect in acceptance with respect to any particular Neutrino Share or any
particular Shareholder. There shall be no obligation on Southern Acquisition,
the Dealer Manager or the Depositary to give notice of any defects or
irregularities in acceptance and no liability shall be incurred by any of them
for failure to give any such notification.
The Offer is not being made to, nor will deposits be accepted from or on
behalf of, holders of Neutrino Shares in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, Southern Acquisition may, in its sole discretion, take
such action as it may deem necessary to extend the Offer to holders of Neutrino
Shares in any such jurisdiction.
The Offer and the accompanying Circular constitute the take-over bid
circular required under the Canadian provincial securities legislation with
respect to the Offer.
DATED at Calgary, Alberta, this 29th day of May, 1998.
779776 ALBERTA LTD.
By: /s/ STEVEN H. MIKEL
President and Chief Executive Officer
18
CIRCULAR
This Circular is provided in connection with the Offer made by Southern
to purchase all of the outstanding Neutrino Shares (including Neutrino Shares
which may become outstanding on the exercise of Neutrino Options).
The terms, conditions and provisions of the accompanying Offer are
incorporated into and form part of this Circular. Shareholders should refer to
the Offer for details of the terms and conditions of the Offer, including
details as to the manner of payment and withdrawal rights. Terms defined in the
Offer but not defined in this Circular have the same meaning herein as in the
Offer, unless the context otherwise requires.
THE INFORMATION CONCERNING NEUTRINO CONTAINED IN THE OFFER AND THIS
CIRCULAR HAS BEEN TAKEN FROM OR IS BASED PRIMARILY UPON PUBLICLY AVAILABLE
DOCUMENTS AND RECORDS OF NEUTRINO ON FILE WITH CANADIAN SECURITIES REGULATORY
AUTHORITIES, THE TSE AND OTHER PUBLIC SOURCES. ALTHOUGH SOUTHERN ACQUISITION HAS
NO KNOWLEDGE THAT WOULD INDICATE THAT ANY STATEMENTS RELATING TO NEUTRINO
CONTAINED HEREIN WHICH IS BASED ON INFORMATION CONTAINED IN SUCH DOCUMENTS AND
RECORDS ARE INACCURATE OR INCOMPLETE, NEITHER SOUTHERN ACQUISITION NOR ITS
DIRECTORS OR OFFICERS ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION NOR FOR ANY FAILURE BY NEUTRINO TO DISCLOSE
EVENTS WHICH MAY HAVE OCCURRED OR WHICH MAY AFFECT THE SIGNIFICANCE OR ACCURACY
OF SUCH INFORMATION, BUT WHICH ARE UNKNOWN TO SOUTHERN ACQUISITION.
Pursuant to the provisions of the securities laws of various provinces
of Canada, the directors of Neutrino must send the Directors' Circular to all
Shareholders in connection with the Offer, which circular, together with other
information, must disclose any material changes in the affairs of Neutrino
subsequent to the date of the most recent published financial statements of
Neutrino.
PURPOSE OF THE OFFER AND PLANS FOR NEUTRINO
PURPOSE OF THE OFFER
The purpose of the Offer is to enable Southern Acquisition to acquire,
directly or indirectly, all of the outstanding Neutrino Shares.
If Southern Acquisition takes up and pays for Neutrino Shares deposited
pursuant to the Offer, Southern Acquisition intends to seek to acquire, directly
or indirectly, all of the remaining Neutrino Shares not deposited under the
Offer by a compulsory acquisition or a Subsequent Acquisition Transaction.
Southern Acquisition will cause the Neutrino Shares acquired under the Offer to
be voted in favour of such a Subsequent Acquisition Transaction and, to the
extent permitted by law, to be counted as part of any minority approval that may
be required in connection with such a transaction. If the Minimum Condition is
satisfied, Southern Acquisition believes that it will own sufficient Neutrino
Shares to effect such a transaction. See "Acquisition of Neutrino Shares Not
Deposited".
PLANS FOR NEUTRINO
If the Offer is successful, certain changes will be made to the
composition of the board of directors of Neutrino to allow the nominees of
Southern Acquisition to replace the current members of such Board. If Neutrino
becomes a wholly-owned subsidiary of Southern Acquisition, Neutrino may be
amalgamated with or wound-up into Southern Acquisition or an affiliate of
Southern Acquisition.
If permitted by applicable law, subsequent to the completion of the
Offer and any compulsory acquisition or Subsequent Acquisition Transaction,
Southern Acquisition intends to delist the Neutrino Shares from the TSE and, if
there are fewer than 15 security holders of Neutrino, to cause Neutrino to cease
to be a reporting issuer under Canadian securities laws.
BACKGROUND TO AND REASONS FOR THE OFFER
Southern's management considers strategic acquisition opportunities on
an ongoing basis. One of Southern's major corporate objectives is to increase
its Canadian oil and gas production through a combination of exploration and
selective acquisitions. The selective acquisition of quality properties is a key
component of Southern's strategy of positioning Southern for future growth. In
addition, Neutrino presented an attractive opportunity to use the expertise of
Neutrino's management team to guide the future growth of Southern in Canada. In
this regard, Southern has made
19
contractual arrangements with the four senior officers of Neutrino to ensure
Neutrino's management team remains intact for a minimum of 12 months following
the completion of the Offer. See "Arrangements, Agreements or Understandings".
Southern has the financial capability to fully develop and maximize the value of
Neutrino's assets. With the acquisition of Neutrino, Southern will have a
significant production base to complement and expand its Canadian oil and gas
property interests, all of which are currently held through its wholly-owned
subsidiary, Spruce Hills Production Company, Inc.
MERGER AGREEMENT
THE OFFER
Southern and Neutrino entered into the Merger Agreement pursuant to
which Southern agreed to make, or cause a wholly-owned subsidiary to make, an
offer to purchase all of the outstanding Neutrino Shares. Under the Merger
Agreement, Neutrino confirmed to Southern that its board of directors had
approved the Offer and the Merger Agreement and had resolved to recommend
acceptance of the Offer to the Shareholders.
Neutrino also agreed with Southern that, among other things, it would
not solicit, initiate or encourage the initiation or continuation of any
inquiries, discussions, negotiations, proposals or offers from any Person in a
manner or thing which would be inconsistent with the successful completion of
the Offer. The foregoing does not prevent the board of directors of Neutrino
from discharging its fiduciary duties.
Southern is permitted under the Merger Agreement, in its sole
discretion, to amend or vary any term or condition of the Offer, provided that
Southern shall not, without the consent of Neutrino, waive or reduce the Minimum
Condition to below 50% of the outstanding Neutrino Shares, extend the Offer for
more than 35 days after the Expiry Date, decrease or change the consideration to
be paid for each Neutrino Share, or amend the Offer or modify its conditions in
a manner that is, in the opinion of Neutrino, acting reasonably, materially
adverse to the holders of Neutrino Shares.
NON-COMPLETION FEE
Neutrino has agreed to pay to Southern a non-completion fee of
U.S.$2,000,000 in the event that, among other things: (i) any Person should,
prior to the Expiry Time, make a Superior Take-over Proposal which is completed
within 120 days of the expiry of the Offer; (ii) any Person should, prior to the
expiry of the Offer, take up and pay for more than 20% of the Neutrino Shares;
(iii) the board of directors of Neutrino withdraws its recommendation to the
Shareholders to accept the Offer and recommends acceptance of a competing offer;
or (iv) Neutrino enters into an agreement with any Person regarding a Take-over
Proposal. Any such payment shall be made within ten Business Days of the event
giving rise to the payment obligation.
BOARD OF DIRECTORS OF NEUTRINO
Neutrino has agreed that, if Southern acquires at least 50% of the
outstanding Neutrino Shares, Neutrino shall use its best efforts to cause the
resignation of such directors and officers of Neutrino as Southern may specify
and to fill the resulting vacancies with nominees of Southern.
TERMINATION OF MERGER AGREEMENT
The Merger Agreement may be terminated in certain circumstances,
including termination:
a. by Neutrino if Southern shall not have taken up and paid for Neutrino
Shares tendered under the Offer on or before the expiry or termination
of the Offer;
b. by Southern, if the Offer terminates or expires, without Southern taking
up and paying for any Neutrino Shares on account of the failure of any
condition which has not been waived by Southern;
c. by either Southern or Neutrino if there has been a misrepresentation,
breach or non-performance by the other party of any material
representation, warranty or covenant contained in the Merger Agreement;
or
d. by Neutrino if Southern has not taken up and paid for any Neutrino
Shares pursuant to the Offer on or before
20
July 28, 1998.
LOCK-UP AGREEMENTS
Southern has entered into Lock-Up Agreements with the Tendering
Shareholders, who hold an aggregate of 10,489,543 Neutrino Shares (approximately
37.8% of the Neutrino Shares issued and outstanding). Under the terms of the
Lock-Up Agreements, such shareholders have agreed to tender, and not withdraw,
all of such Neutrino Shares to the Offer in accordance with the terms and
conditions of the Offer unless the Merger Agreement is terminated or a Superior
Take-over Proposal is made and Southern does not match the Superior Take-over
Proposal.
SOUTHERN ACQUISITION AND SOUTHERN
779776 Alberta Ltd. ("Southern Acquisition") is a private corporation
incorporated under the ABCA and organized as a wholly-owned subsidiary of
Southern for the purposes of making the Offer. Southern Acquisition's head and
principal office is located at Suite 1400, 350 - 7th Avenue S.W., Calgary,
Alberta, T2P 3N9.
Southern is an independent oil and gas company incorporated under the
laws of Nevada and headquartered in Houston, Texas. Southern is engaged in the
acquisition, exploitation, exploration and operation of oil and gas properties,
primarily along the Gulf Coast, the Mid-continent and in Canada, with a primary
focus on the Gulf Coast Basin, both onshore and offshore. Southern's business
strategy is to increase reserves and shareholder value through a balanced
program of acquisitions, exploitation and controlled risk exploration.
The common stock of Southern is listed and posted for trading on the
NASDAQ National Market System.
NEUTRINO RESOURCES INC.
GENERAL
Neutrino was formed as a result of the amalgamation of Neutrino
Resources Ltd., Red Oak Resources Ltd. and Maxon Energy Inc., on October 6,
1995. Effective February 28, 1997, Neutrino amalgamated with Dominion Explorers
Inc. under the ABCA and continued operations under the name of Neutrino.
Neutrino's principal and registered office is located at 1400, 300 - 5th Avenue
S.W., Calgary, Alberta, T2P 3C4.
Neutrino is engaged primarily in the acquisition of petroleum and
natural gas rights and the exploration for and development and production of oil
and natural gas in western Canada.
Neutrino is subject to the information and reporting requirements of the
ABCA, the securities laws of all provinces of Canada and the rules of the TSE.
In accordance therewith, Neutrino files reports and other information with
provincial securities regulatory authorities in Canada and with the TSE relating
to its business, financial statements and other matters. Information as of
particular dates concerning Neutrino's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Neutrino Shares, any material interests of such persons in transactions with
Neutrino and other matters is required to be disclosed in proxy statements
distributed to Neutrino Shareholders and filed with such provincial securities
regulatory authorities and with the TSE. Neutrino's latest proxy statement is
dated as of April 20, 1998 and has been mailed to all Shareholders in connection
with Neutrino's annual shareholders' meeting to be held on June 1, 1998.
Pursuant to the provisions of the securities laws of various provinces
of Canada, the directors of Neutrino must send a Directors' Circular to all
Shareholders in connection with the Offer, which Directors' Circular, together
with other information, must disclose any material changes in the affairs of
Neutrino subsequent to the date of the most recent published financial
statements of Neutrino.
DESCRIPTION OF SHARE CAPITAL
Neutrino is authorized to issue an unlimited number of preferred shares
issuable in series (the "Preferred Shares") and an unlimited number of Neutrino
Shares. The outstanding capital of Neutrino as at May 28, 1998 was 27,756,534
Neutrino Shares and no Preferred Shares.
NEUTRINO SHARES
21
Holders of Neutrino Shares are entitled to dividends as and when
declared by the board of directors of Neutrino, to one vote per share at
meetings of shareholders, and upon the liquidation, dissolution or winding-up of
Neutrino to receive such assets of Neutrino as are distributable to the holders
of Neutrino Shares.
PREFERRED SHARES
The Preferred Shares are issuable in series. The Preferred Shares of
each series rank on a parity with the Preferred Shares of every other series and
are entitled to preference over the Neutrino Shares and any other shares ranking
junior to the Preferred Shares with respect to the payment of dividends and the
distribution of assets in the event of the liquidation, dissolution or
winding-up of Neutrino. The board of directors of Neutrino is empowered to fix
the number of shares and the rights to be attached to the Preferred Shares of
each series, including the amount of dividends and any conversion, voting and
redemption rights. Subject to the foregoing, and series rights arising upon a
default by Neutrino with respect to the series and to applicable law, the
Preferred Shares as a class are not entitled to receive notice of, attend or
vote at meetings of the shareholders of Neutrino.
DIVIDEND RECORD AND POLICY
No dividends have been declared by the board of directors of Neutrino to
date and there is no intention to declare any dividends in the future.
PRICE RANGE AND TRADING VOLUME OF NEUTRINO SHARES
The Neutrino Shares are listed and posted for trading on the TSE using
the symbol "NTO". The following table sets forth the high and low trading prices
and the volume of Neutrino Shares traded as reported on the TSE for the periods
indicated.
HIGH LOW VOLUME
- ---------------------- ----------------- ---- ------------ ---- ---------------
(NO. OF
($) ($) SHARES)
1997
First Quarter 1.85 1.43 2,250,900
Second Quarter 1.71 1.25 1,798,500
Third Quarter 1.70 1.27 2,489,200
Fourth Quarter 2.05 1.36 6,074,100
1997 YEAR 2.05 1.25 12,612,700
1998
January 1.65 1.40 753,400
February 1.60 1.35 1,282,700
March 1.84 1.38 1,669,600
April 1.54 1.39 672,701
May 1 - 28 1.77 1.40 3,815,457
On May 12, 1998, the last day on which Neutrino Shares traded prior to
the public announcement by Southern of its intention to make the Offer, the
closing price of the Neutrino Shares on the TSE was $1.41. Based on the closing
price of $1.41 per Neutrino Share on May 12, 1998, the Offer represents a 27.7%
premium over the closing price of the Neutrino Shares on the TSE on May 12, 1998
and a 23.4% premium to the 20 day weighted average closing price of the Neutrino
Shares prior to the date of the announcement of the Offer.
SOURCE OF FUNDS
Southern estimates that if it acquires, through Southern Acquisition,
all of the Neutrino Shares pursuant to the Offer the total amount required under
the Offer to purchase such Neutrino Shares and to pay the related fees and
expenses will be approximately $52 million (Canadian).
Southern has received a letter of commitment pursuant to which Compass
Bank-Houston has agreed to provide a credit facility (the "Credit Facility") to
finance the purchase of the Neutrino Shares by Southern Acquisition. Funding
under the Credit Facility is subject to the satisfaction of certain customary
closing conditions, including
22
absence of defaults or material adverse changes, execution of the credit
agreement and related documentation.
The documentation relating to the Credit Facility will contain
covenants, restrictions, representations, warranties and events of default with
respect to the Credit Facility usual in credit facilities of this nature,
including reporting requirements, compliance with laws, prohibitions on creation
of certain liens and on mergers and consolidations, limitations on sale of
assets, and prohibitions on incurrence of debt and guarantees.
The total amount of $52 million (Canadian) required under the Offer will
be funded out of Southern's working capital and the Credit Facility.
EFFECT OF THE OFFER ON MARKET AND LISTING
The purchase of Neutrino Shares by Southern Acquisition pursuant to the
Offer will reduce the number of such Neutrino Shares that might otherwise trade
publicly, as well as the number of holders of Neutrino Shares, and, depending on
the number of holders depositing and the number of Neutrino Shares purchased
under the Offer, could adversely affect the liquidity and market value of the
remaining Neutrino Shares held by the public. After the purchase of Neutrino
Shares under the Offer, Neutrino may cease to be subject to the public reporting
and proxy solicitation requirements of the ABCA and the securities laws of
certain provinces of Canada.
The rules and regulations of the TSE establish certain criteria which,
if not met, could lead to the delisting of the Neutrino Shares from such
exchange. Among such criteria are the number of holders of Neutrino Shares, the
number of Neutrino Shares publicly held and the aggregate market value of the
Neutrino Shares publicly held. Depending on the number of Neutrino Shares
purchased pursuant to the Offer, it is possible that the Neutrino Shares could
fail to meet the criteria for continued listing on the TSE. If this were to
happen, the Neutrino Shares could be delisted and this could, in turn, adversely
affect the market or result in a lack of an established market for such Neutrino
Shares. It is the intention of Southern Acquisition to apply to delist the
Neutrino Shares from the TSE as soon as practicable after completion of the
Offer and any compulsory acquisition or Subsequent Acquisition Transaction.
If the Neutrino Shares are delisted, it is possible that such shares
would be traded in the over-the-counter market and that price quotations for
those shares would be reported through the Canadian over-the-counter automated
trading system. The extent of the public market for the Neutrino Shares and the
availability of such quotations would, however, depend upon the number of
Shareholders remaining at such time, the interest in maintaining a market in
such shares on the part of brokerage houses and other factors.
ACQUISITION OF NEUTRINO SHARES NOT DEPOSITED
GENERAL
The purpose of the Offer is to enable Southern Acquisition to acquire
all outstanding Neutrino Shares. If Southern Acquisition takes up and pays for
Neutrino Shares under the Offer, Southern Acquisition intends to utilize the
compulsory acquisition provisions of Part 16 of the ABCA, if available, to
acquire the remaining Neutrino Shares not deposited under the Offer or, if
necessary, acquire such remaining Neutrino Shares pursuant to a Subsequent
Acquisition Transaction, as discussed below.
COMPULSORY ACQUISITION
If, by the Expiry Time or within 120 days after the date of the Offer,
whichever period is shorter, the Offer is accepted by the holders of not less
than 90% of the shares of any class of shares to which the Offer relates, other
than shares of that class held at the date of the Offer by or on behalf of
Southern Acquisition or its affiliates and associates (as defined in the ABCA),
and Southern Acquisition acquires such deposited shares, then Southern
Acquisition will elect to acquire, pursuant to the provisions of Part 16 of the
ABCA, the remainder of the securities of such class held by each Shareholder who
did not accept the Offer (a "Dissenting Offeree") (which definition includes any
person who subsequently acquires any of such shares), on the same terms,
including the offer price, as the shares of such class were acquired under the
Offer (a "compulsory acquisition").
To exercise this statutory right, Southern must give notice (the
"Offeror's Notice") to the Dissenting Offerees of such proposed acquisition on
or before the earlier of 60 days from the Expiry Time and 180 days from the date
of
23
the Offer. Within 20 days of the giving of the Offeror's Notice, Southern
Acquisition must pay or transfer to Neutrino the consideration Southern
Acquisition would have had to pay or transfer to the Dissenting Offerees if they
had elected to accept the Offer, to be held in trust by Neutrino for the
Dissenting Offerees. Within 20 days after receipt of the Offeror's Notice, each
Dissenting Offeree must send the certificates representing the shares of the
class of shares to which the Offer relates held by such Dissenting Offeree to
Neutrino, and may elect either to transfer such shares to Southern Acquisition
on the terms on which Southern Acquisition acquired shares of that class under
the Offer, or to demand payment of the fair value of such shares by so notifying
Southern Acquisition and applying to the Court of Queen's Bench of Alberta to
fix that value, within 60 days after the date of the sending of the Offeror's
Notice. If a Dissenting Offeree fails to notify Southern Acquisition and apply
to the Court of Queen's Bench of Alberta within the applicable 60 day period,
the Dissenting Offeree will be deemed to have elected to transfer such shares to
Southern Acquisition on the terms of the Offer. If a Dissenting Offeree has
elected to demand payment of the fair value of the shares, Southern Acquisition
also has the right to apply to the Court of Queen's Bench of Alberta to fix the
fair value of the shares of that Dissenting Offeree. Any judicial determination
of the fair value of the Neutrino Shares could be more or less than the amount
paid pursuant to the Offer.
THE FOREGOING IS ONLY A SUMMARY OF THE RIGHT OF COMPULSORY ACQUISITION
WHICH MAY BECOME AVAILABLE TO SOUTHERN ACQUISITION. THE SUMMARY IS NOT INTENDED
TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY THE PROVISIONS OF PART 16 OF
THE ABCA. HOLDERS OF NEUTRINO SHARES SHOULD REFER TO PART 16 OF THE ABCA FOR THE
FULL TEXT OF THE RELEVANT STATUTORY PROVISIONS, AND THOSE WHO WISH TO BE BETTER
INFORMED ABOUT THOSE PROVISIONS SHOULD CONSULT THEIR LEGAL ADVISORS. SECTIONS IN
PART 16 OF THE ABCA ARE COMPLEX AND MAY REQUIRE STRICT ADHERENCE TO NOTICE AND
TIMING PROVISIONS, FAILING WHICH SUCH RIGHTS MAY BE LOST OR ALTERED.
SUBSEQUENT ACQUISITION TRANSACTIONS
If Southern Acquisition takes up and pays for Neutrino Shares deposited
pursuant to the Offer and the foregoing statutory right of acquisition is not
available or if Southern Acquisition does not proceed under such provisions,
Southern Acquisition intends to seek to acquire, directly or indirectly, all of
the remaining Neutrino Shares not deposited under the Offer pursuant to an
amalgamation, statutory amalgamation, capital reorganization or other
transaction (collectively referred to herein as a "Subsequent Acquisition
Transaction") involving Southern Acquisition, or an affiliate of Southern
Acquisition, and Neutrino and/or the Shareholders for: (i) the purpose of
Neutrino becoming, directly or indirectly, a wholly-owned subsidiary of Southern
Acquisition; or (ii) with the effect of amalgamating or merging Neutrino's
business and assets with or into Southern or an affiliate of Southern
Acquisition. At any meeting of Shareholders called to consider a Subsequent
Acquisition Transaction, Southern Acquisition will cause the Neutrino Shares
acquired under the Offer to be voted in favour of such a transaction and, to the
extent permitted by law, to be counted as part of any minority or independent
Shareholder approval that may be required in connection with such a transaction.
The tax consequences to a Shareholder of a Subsequent Acquisition
Transaction may differ from the tax consequences to such Shareholder of
accepting the Offer. See "Canadian Federal Income Tax Considerations" in the
Circular.
The methods described above of acquiring the Neutrino Shares not
acquired by Southern Acquisition pursuant to the Offer may be a "going private
transaction" within the meaning of certain applicable Canadian securities
legislation and regulations (collectively, the "Regulations"), Ontario
Securities Commission ("OSC") Policy Statement No. 9.1 ("OSC Policy 9.1") and
Commission des valeurs mobilieres du Quebec ("QSC") Policy Q-27 ("QSC Policy
Q-27") with respect to the holders of a class of participating securities, such
as the Neutrino Shares, if such method would result in the interest of the
holder of such class of securities (the "affected securities") being terminated
without the consent of the holder and without the substitution therefor of an
interest of equivalent value in a participating security which is a security of
Neutrino or a successor to the business of Neutrino or of another issuer that
controls Neutrino or, in the case of OSC Policy 9.1 and QSC Policy Q-27, an
issuer that controls a successor to the business of Neutrino. Southern
Acquisition expects that any Subsequent Acquisition Transaction will be a going
private transaction for the purposes of OSC Policy 9.1 and QSC Policy Q-27. In
certain circumstances, the provisions of OSC Policy 9.1 and QSC Policy Q-27 may
also deem certain types of Subsequent Acquisition Transactions to be "related
party transactions".
OSC Policy 9.1 and QSC Policy Q-27 provide that, unless exempted, a
corporation proposing to carry out a going private transaction is required to
prepare a valuation of the affected securities (and any non-cash consideration
being offered therefor) and provide to the holders of the affected securities a
summary of such valuation. OSC Policy
24
9.1 and QSC Policy Q-27 impose similar requirements in respect of "related party
transactions". The Regulations impose a requirement to include a summary of a
similar valuation in a take-over bid circular where it is anticipated by
Southern Acquisition that a going private transaction will follow the take-over
bid. Southern Acquisition is relying upon exemptions and on blanket and
discretionary waivers granted by the applicable securities commissions in
connection with the valuation requirements under the Regulations in connection
with the Offer, where required, and intends to rely on any exemption then
available or to seek waivers pursuant to OSC Policy 9.1 and QSC Policy Q-27 from
the OSC and QSC, respectively, exempting Southern Acquisition or Neutrino, as
appropriate, from the valuation requirements under OSC Policy 9.1 and QSC Policy
Q-27, respectively, in connection with any Subsequent Acquisition Transaction.
OSC Policy 9.1 and QSC Policy Q-27 would also generally require that, in
addition to any other required security holder approval, in order to complete a
going private transaction or related party transaction, the approval of a simple
or two-thirds majority (depending on the nature of the transaction and the
nature and value of the consideration offered) of the votes cast by "minority"
holders of the affected securities be obtained. The necessary level of security
holder approval required with respect to a going private transaction is a simple
majority of the "minority" vote unless: (i) the consideration to be paid is
payable wholly or partly other than in cash or in the right to receive cash
within 35 days of the approval of the going private transaction; or (ii) if a
formal valuation is required and the consideration is payable entirely in cash
and is less in amount than the per security value or the simple average of the
high and low ends of the range of per security values arrived at by the formal
valuation, in which cases a two-thirds majority of the "minority" vote is
required. In the case of a related party transaction, a simple majority of the
"minority" vote is required unless, in the case of a related party transaction
where a formal valuation is required, the value of the consideration to be paid
is less than the value or the simple average of the high and low ends of the
range of values arrived at by the formal valuation, in which case a two-thirds
majority of the "minority" vote is required. In relation to the Offer and any
subsequent going private or related party transaction, the "minority" holders
will be, unless an exemption is available or discretionary relief is granted by
the OSC and QSC, as required, all holders of Neutrino Shares, other than
Southern Acquisition, any "interested party" or any person or company who is a
"related party" of Southern Acquisition for the purposes of OSC Policy 9.1 and
QSC Policy Q-27, or any person or company acting jointly or in concert with the
foregoing or any affiliate of the foregoing. However, OSC Policy 9.1 and QSC
Policy Q-27 also provide that Southern Acquisition may treat Neutrino Shares
acquired pursuant to the Offer, other than Neutrino Shares tendered pursuant to
the Lock-up Agreements by those Tendering Shareholders who participated in the
negotiation of the Merger Agreement pursuant to the Lock-Up Agreements, as
"minority" shares and to vote those Neutrino Shares, or to consider them voted,
in favour of such going private (or related party) transaction if the
consideration per security in the transaction is at least equal in value to the
consideration paid under the Offer. Southern Acquisition currently intends that
the consideration paid under any Subsequent Acquisition Transaction proposed by
it would be identical to the consideration offered under the Offer. Under OSC
Policy 9.1 and QSC Policy Q-27, if, following the Offer, Southern Acquisition
and its affiliates are the registered holders of 90% or more of the Neutrino
Shares at the time the Subsequent Acquisition Transaction is initiated, the
requirement for minority approval would not apply to the transaction if a
statutory appraisal remedy is available to the minority Shareholders, or if a
substantially equivalent enforceable right is made available to the minority
Shareholders.
In the event a Subsequent Acquisition Transaction were to be
consummated, holders of Neutrino Shares, under Section 184 of the ABCA, may have
the right to dissent and demand payment of the fair value of such Neutrino
Shares. This right, if the statutory procedures are complied with, could lead to
a judicial determination of the fair value required to be paid to such
dissenting holders of their Neutrino Shares. The fair value of Neutrino shares
so determined could be more or less than the amount paid per Neutrino Share
pursuant to the Subsequent Acquisition Transaction or the Offer. Any such
judicial determination of the fair value of the Neutrino Shares could be based
upon considerations other than, or in addition to, the market price of the
Neutrino Shares.
Shareholders should consult their legal advisors for a determination of
their legal rights with respect to any transaction which may constitute a going
private transaction or a related party transaction.
OTHER ALTERNATIVES
If Southern Acquisition proposes a Subsequent Acquisition Transaction
but cannot promptly obtain any required approval, or otherwise does not complete
a Subsequent Acquisition Transaction, Southern Acquisition will evaluate its
other alternatives. Such alternatives could include, to the extent permitted by
applicable law, purchasing additional Neutrino Shares in the open market, in
privately negotiated transactions, in another takeover bid or exchange offer or
otherwise, or taking no further action to acquire additional Neutrino Shares.
Any additional
25
purchase of Neutrino Shares could be at a price greater than, equal to or less
than the price to be paid for the Neutrino Shares under the Offer and could be
for cash or other consideration. Alternatively, Southern Acquisition may sell or
otherwise dispose of any or all Neutrino Shares acquired pursuant to the Offer
or otherwise. Such transactions may be effected on terms and at a price then
determined by Southern Acquisition, which may vary from the price paid for
Neutrino Shares under the Offer.
JUDICIAL DEVELOPMENTS
Certain judicial decisions may be considered relevant to any Subsequent
Acquisition Transaction which may be proposed or effected subsequent to the
expiry of the Offer. Prior to the pronouncement of OSC Policy 9.1 and QSC Policy
Q-27, Canadian courts had, in a few instances, granted preliminary injunctions
to prohibit transactions which constituted "going private transactions" within
the meaning of OSC Policy 9.1 and QSC Policy Q-27.
In two decisions in 1978, the Supreme Court of Ontario restrained
proposed amalgamations which would have had the effect of eliminating the
interest which minority shareholders held in one of the amalgamating
corporations, without the minority shareholders having been offered the
opportunity to receive in exchange participating securities issued by the
amalgamated corporation, an affiliate or a successor body corporate, with the
result that the existing controlling shareholder would become the sole holder of
common shares of the amalgamated corporation. See CARLTON REALTY LTD. V. MAPLE
LEAF MILLS LTD. (1978), 22 O.R. (2d) 198 and ALEXANDER V. WESTEEL-ROSCO
LTD.(1978), 22 O.R. (2d) 211. In light of the specific regulatory framework
governing "going private transactions" in OSC Policy 9.1 and QSC Policy Q-27 and
the decision of the Supreme Court of Ontario in Lornex described below, the
decisions in MAPLE LEAF MILLS and WESTEEL-ROSCO may be of limited relevance to
any Subsequent Acquisition Transaction that may be effected by Southern
Acquisition subsequent to the Offer.
In THE GENERAL ACCIDENT ASSURANCE COMPANY OF CANADA V. LORNEX MINING
CORPORATION LTD. ET AL (1988), 66 O.R. (2d) 783, the Supreme Court of Ontario
declined to grant injunctive relief to a minority shareholder of Lornex seeking
to prevent a proposed amalgamation squeeze-out transaction which was to follow a
take-over bid made through the facilities of the Vancouver Stock Exchange. The
minority shareholder also sought an order declaring that the minority
shareholders of Lornex were entitled to vote separately as a class in approving
the proposed amalgamation. Lornex was not an "offering corporation" as defined
in the ONTARIO BUSINESS CORPORATIONS ACT ("OBCA"), so the "going private
transaction" provisions of Section 190 of the OBCA were held to be not
applicable to it. The Court held that the proposed amalgamation did not
contravene the relevant provisions of the OBCA and that, in light of the
oppression remedy contained in the OBCA, the OBCA did not require that a
separate class vote of the minority shareholders of Lornex be held to approve
the amalgamation. The Court further held that the minority shareholder failed to
establish that the proposed amalgamation was oppressive or unfairly prejudicial
to or unfairly disregarded the rights of the minority shareholders of Lornex.
Southern Acquisition has been advised that the current trend, both in
legislation and in the United States jurisprudence upon which the previous
Canadian decisions were based, is to permit "going private transactions" to
proceed subject to compliance with requirements intended to ensure procedural
and substantive fairness to the minority shareholders. This is demonstrated in
the release by the Director under the CANADA BUSINESS CORPORATIONS ACT (the
"CBCA") of a policy, effective September 22, 1994, stating, among other things,
that the Director under the CBCA generally is of the opinion that a going
private transaction is permitted under the CBCA so long as the transaction is
not oppressive or unfairly prejudicial to and does not unfairly disregard the
interests of a person whose interests in a participating security is being
terminated without his or her consent, and that, generally, compliance with
established regulatory indicia of fairness such as the requirements of OSC
Policy 9.1 and QSC Policy Q-27, will suffice for these purposes. Shareholders
should consult their legal advisors for a determination of their legal rights.
DEPOSITARY
Southern Acquisition has engaged Montreal Trust Company of Canada as the
Depositary for the receipt of certificates in respect of Neutrino Shares and
Letters of Transmittal deposited under the Offer. In addition, the Depositary
will receive Notices of Guaranteed Delivery deposited under the Offer at its
office in Toronto. The duties of the Depositary also include assisting in making
settlement under the Offer. The Depositary will receive reasonable and customary
compensation from Southern Acquisition for its services in connection with the
Offer, will be reimbursed for certain out-of-pocket expenses and will be
indemnified against certain liabilities, including liabilities under securities
laws, and expenses in connection therewith.
26
SOLICITING DEALER GROUP
Southern Acquisition has retained Griffiths McBurney & Partners as the
Dealer Manager in connection with the Offer and to solicit acceptances of the
Offer. The Dealer Manager has undertaken to form a Soliciting Dealer Group
comprised of members of the Investment Dealers Association of Canada, members of
the stock exchanges in Canada and members of the National Association of
Securities Dealers, Inc., to solicit acceptances of the Offer. Each member of
the Soliciting Dealer Group, including the Dealer Manager, is referred to herein
as a "Soliciting Dealer". Southern Acquisition has agreed to pay the Dealer
Manager an aggregate fee of $100,000 for forming and managing the soliciting
dealer group in respect of the Offer and for related matters. Southern
Acquisition has also agreed to pay to each Soliciting Dealer whose name appears
in the appropriate space in the Letter of Transmittal accompanying a deposit of
Neutrino Shares a fee of $0.01 for each such Neutrino Share deposited and taken
up by Southern Acquisition under the Offer. The aggregate amount payable with
respect to any single depositing holder of Neutrino Shares will be not less than
$50 nor more than $1,000, provided that the $50 minimum will only be payable in
respect of deposits of Neutrino Shares equal to or greater than 250 Neutrino
Shares. Where Neutrino Shares deposited and registered in a single name are
beneficially owned by more than one person, the minimum and maximum amounts will
be applied separately in respect of each such beneficial owner. No fees will be
payable for any Neutrino Shares deposited by the Tendering Shareholders or other
officers or employees of Neutrino. Southern Acquisition may require the
Soliciting Dealer to furnish evidence of such beneficial ownership satisfactory
to Southern Acquisition prior to the payment of the fees to any such Soliciting
Dealer. When a single beneficial owner deposits Neutrino Shares under more than
one Letter of Transmittal all such securities shall be aggregated in determining
whether the maximum applies.
NO BROKERAGE FEES OR COMMISSIONS WILL BE PAYABLE BY ANY SHAREHOLDER WHO
DEPOSITS NEUTRINO SHARES DIRECTLY WITH THE DEPOSITARY OR WHO USES THE SERVICES
OF THE DEALER MANAGER OR A MEMBER OF THE SOLICITING DEALER GROUP TO ACCEPT THE
OFFER. SHAREHOLDERS SHOULD CONTACT THE DEALER MANAGER, THE DEPOSITARY, OR A
BROKER OR DEALER FOR ASSISTANCE IN ACCEPTING THE OFFER AND IN DEPOSITING THE
NEUTRINO SHARES WITH THE DEPOSITARY.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Burnet, Duckworth & Palmer, counsel to Southern and
Southern Acquisition, the following is a fair and adequate summary of the
principal Canadian federal income tax consequences pursuant to the Tax Act
generally applicable to a Shareholder who disposes of Neutrino Shares pursuant
to the Offer and who, for purposes of the Tax Act, holds the Neutrino Shares as
capital property, deals at arm's length with Southern at all times up to and
including the completion of the Offer, and following completion of the Offer
will not, either alone or together with any person with whom the Shareholder
does not deal at arm's-length, control Southern or beneficially own shares of
Southern having a fair market value in excess of 50% of the fair market value of
all outstanding shares of Southern.
This summary is based upon the provisions of the Tax Act and the
regulations thereunder that are in force as of the date hereof, all specific
proposals to amend the Tax Act and the regulations thereunder that have been
publicly announced prior to the date hereof (the "Proposed Amendments") and
counsel's understanding of the current published administrative and assessing
policies of Revenue Canada. This summary is not exhaustive of all possible
Canadian federal income tax considerations, and does not take into account or
anticipate any changes in the law, whether by legislative, governmental or
judicial action, nor does it take into account provincial, territorial or
foreign tax considerations which may differ significantly from those discussed
herein.
Generally, Neutrino Shares will be considered to be held as capital
property by a Shareholder provided the Shareholder does not hold the Neutrino
Shares in the course of carrying on a business and has not acquired them in one
or more transactions considered to be an adventure in the nature of trade.
Certain Shareholders who might not otherwise be considered to hold their
Neutrino Shares as capital property may, in certain circumstances, be entitled
to have them treated as capital property by making the election permitted by
subsection 39(4) of the Tax Act. This summary is specifically not applicable to
a Shareholder who is a "tax shelter investment" under the Proposed Amendments or
that is a "financial institution" as defined in the Tax Act which is therefore
subject to the requirements in the Tax Act to mark its securities to market on
an annual basis.
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE LEGAL
OR TAX ADVICE TO ANY PARTICULAR
27
PERSON. SHAREHOLDERS SHOULD THEREFORE CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE TAX CONSEQUENCES TO THEM OF THE OFFER. SHAREHOLDERS RESIDENT IN
CANADA
In addition to the comments set out above under "General", the following
applies to Shareholders who are resident in Canada for purposes of the Tax Act.
HOLDERS TENDERING NEUTRINO SHARES
Shareholders who tender their Neutrino Shares under the Offer will
realize a capital gain or sustain a capital loss to the extent that the cash
received exceeds, or is exceeded by, the aggregate of the adjusted cost base of
the Neutrino Shares which are disposed of, and any reasonable costs of making
the disposition. Such disposing Shareholder will be required to include in
income for the taxation year of the disposition, three-quarters of the amount of
such capital gain (a "taxable capital gain") and will generally be able to
deduct three-quarters of the amount of such capital loss (an "allowable capital
loss") against taxable capital gains, realized by such Shareholder in the
current tax year, in any of the three preceding taxation years or in any future
taxation year.
SUBSEQUENT TRANSACTIONS
As described in Section 12 of the Offer, "Acquisition of Neutrino Shares
Not Deposited", Southern Acquisition may consider means of acquiring, directly
or indirectly, all of the Neutrino Shares not deposited under the Offer (a
"Subsequent Acquisition Transaction"). The consequences under the Tax Act to a
Shareholder of any Subsequent Acquisition Transaction would depend upon the
nature of the transaction.
If, in the course of a Subsequent Acquisition Transaction, all of a
Shareholder's Neutrino Shares are disposed of for cash or for other property,
including stock of another corporation (other than stock of Neutrino or a
successor to Neutrino), the tax consequences to the Shareholder would be the
same as described above. If the Neutrino Shares are exchanged for other shares
of Neutrino or shares of a successor of Neutrino, the exchange may be performed
on a tax-free basis. In general terms, the existing Neutrino Shares would be
deemed to have been disposed of, and the shares acquired on the exchange would
be deemed to have been acquired, for an amount equal to the total adjusted cost
base to the Shareholder of the Neutrino Shares disposed of. No capital gain or
capital loss would arise on such an exchange.
If a Subsequent Acquisition Transaction results in an amalgamation of
Neutrino and either Southern Acquisition or an affiliate of Southern
Acquisition, the transaction would generally result in the issuance to
Shareholders of either shares of the amalgamated corporation or shares of
Southern Acquisition. Upon the amalgamation, a Shareholder's Neutrino Shares
would be considered to be disposed of, and the shares of the amalgamated
corporation or of Southern Acquisition acquired, for an amount equal to the
total adjusted cost base to the Shareholder of the Neutrino Shares disposed of.
Consequently, no capital gain or capital loss would arise upon the amalgamation.
A subsequent disposition of the shares acquired on the amalgamation may give
rise to a capital gain or a capital loss.
If in the course of a Subsequent Acquisition Transaction, shares are
acquired from a Shareholder (including upon the exercise by a Shareholder of
certain dissent rights), the Shareholder would be deemed to have received a
taxable dividend equal to the amount by which the amount received (other than in
respect of interest awarded by a court) exceeds the paid-up capital of such
shares. The Shareholder would generally also be considered to have disposed of
the shares for proceeds of disposition equal to the amount received by the
Shareholder less the amount of any deemed dividend referred to above and any
interest awarded by a court. Interest awarded to a dissenting Shareholder by a
court will be included in the dissenting Shareholder's income for the purposes
of the Tax Act. In certain circumstances, a dividend received by a corporation,
or certain partnerships or trusts, may be recharacterized as a capital gain, or
may operate to reduce a capital loss.
To the extent that any Subsequent Acquisition Transaction is proposed by
Southern Acquisition, Shareholders are urged to consult their own professional
advisors to determine the consequences to them of the transaction.
SHAREHOLDERS NOT RESIDENT IN CANADA
In addition to the comments set out above under "General", the following
applies to Shareholders who, for the
28
purposes of the Tax Act, have not been resident in Canada at any time while they
held their Neutrino Shares, do not carry on the insurance business in Canada and
who do not use or hold and are not deemed under the Tax Act to use or hold their
Neutrino Shares in or in the course of carrying on a business in Canada
(referred to hereafter as "Non-Resident Shareholders").
NON-RESIDENT SHAREHOLDERS ACCEPTING THE OFFER
Non-Resident Shareholders will only be subject to taxation in respect of
the disposition of their Neutrino Shares to the extent such shares constitute
"taxable Canadian property". Generally speaking, Neutrino Shares will constitute
taxable Canadian property to a holder if, at any time during the five year
period immediately preceding the disposition, the Non-Resident Shareholder,
either alone or together with persons with whom the Non-Resident Shareholder did
not deal at arm's length, owned 25% or more of the issued shares of any class or
series in the capital stock of Neutrino, or the Non-Resident Shareholder's
Neutrino Shares were acquired in a tax deferred exchange in consideration for
property that was itself "taxable Canadian property". For the purposes of making
the determination of ownership for the five years preceding the disposition, any
rights or options to acquire Neutrino Shares will be deemed to constitute
ownership. Non-Resident Shareholders whose Neutrino Shares constitute taxable
Canadian property will generally be subject to taxation on the same basis as
holders who are resident in Canada.
Non-Resident Shareholders whose Neutrino Shares constitute taxable
Canadian property may nonetheless be exempted from taxation on gains to the
extent that they can avail themselves of the provisions of a bilateral tax
treaty between Canada and their jurisdiction of residence. For example, holders
of Neutrino Shares resident in the United States will generally be exempt from
Canadian taxation in respect of a capital gain on the disposition of their
Neutrino Shares if such shares do not relate to a permanent establishment of the
Non-Resident Shareholder in Canada.
SUBSEQUENT TRANSACTIONS
The consequences under the Tax Act to a Non-Resident Shareholder of any
Subsequent Acquisition Transaction would depend upon the nature of the
transaction but would generally be the same as those described above with
respect to Shareholders that are resident in Canada except that the Non-Resident
Shareholder would not be subject to taxation under the Tax Act in respect of any
capital gain that is recognized unless the Non-Resident Shareholder's Neutrino
Shares are "taxable Canadian property", as described above. Neutrino Shares or
any shares acquired in exchange therefor will generally constitute taxable
Canadian property if they are not listed on a recognized Canadian stock
exchange. In respect of certain amalgamations whereby listed shares are
exchanged for unlisted shares, the Proposed Amendments will deem such shares to
continue to be listed provided that the shares are redeemed, acquired or
cancelled by the issuer within 60 days of the amalgamation. If in the course of
a Subsequent Acquisition Transaction, shares are acquired by the issuer from a
Non-Resident Shareholder (including upon the exercise by a Non-Resident
Shareholder of certain dissent rights), the Non-Resident Shareholder would be
deemed to have received a taxable dividend equal to the amount by which the
amount received (other than in respect of interest awarded by a court) exceeds
the paid-up capital of the shares which are disposed of. Any dividend which is
deemed to have been paid would be subject to Canadian withholding tax at the
rate of 25% unless the rate is reduced under the provisions of an applicable tax
treaty. Under the Canada-United States Income Tax Convention, the rate of
withholding tax on dividends is generally reduced to 15%. The Non-Resident
Shareholder would also be considered to have disposed of the shares for proceeds
of disposition equal to the amount received by the Non-Resident Shareholder less
the amount of any deemed dividend referred to above and any interest awarded by
a court. Any capital gain recognized on the disposition of the Non-Resident
Shareholder's shares would not be subject to tax under the Tax Act unless such
shares are "taxable Canadian property".
To the extent that any Subsequent Acquisition Transaction is proposed by
Southern Acquisition, Non-Resident Shareholders are urged to consult their own
professional advisors to determine the consequences to them of the transaction
and in particular whether any shares held by them during the course of the
Subsequent Acquisition Transaction would be held by them as "taxable Canadian
property".
Interest awarded to a dissenting Non-Resident Shareholder by a court
will be subject to Canadian withholding tax at the rate of 25% unless the rate
is reduced under the provisions of an applicable tax treaty. Under the United
States-Canada Income Tax Convention, the rate of withholding tax on interest is
generally reduced to 10%.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income
tax considerations generally
29
applicable to holders of Neutrino Shares who are United States Persons (as
defined below) and hold such stock as capital assets ("U.S. Holders"). The
discussion is intended only as a summary and does not purport to be a complete
analysis or listing of all potential tax considerations that may be relevant to
such U.S. Holders. The discussion does not include special rules that may apply
to certain U.S. Holders (including, but not limited to, insurance companies,
tax-exempt organizations, financial institutions or broker-dealers, persons that
have owned, or are deemed to have owned, 10% or more of the voting shares of
either Southern or Neutrino at any time during the five-year period ending on
the date on which Southern Acquisition acquires the Neutrino shares pursuant to
the Offer, persons holding the stock or warrants as part of a "straddle",
"hedge" or "conversion transaction", and investors who are not United States
Persons), and does not address the tax consequences of the law of any state,
locality or foreign jurisdiction. The discussion is based upon currently
existing provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and existing and proposed Treasury regulations promulgated thereunder
and current administrative rulings and court decisions. All of the foregoing are
subject to change and any such change could affect the continuing validity of
this discussion.
As used herein, "United States Person" means a beneficial owner of stock
who or that (i) is a citizen or resident of the United States, (ii) is a
corporation, partnership or other entity created or organized in or under the
laws of the United States or political subdivision thereof, (iii) is an estate
the income of which is subject to U.S. federal income taxation regardless of its
source, (iv) is a trust if (A) a U.S. court is able to exercise primary
supervision over the administration of the trust and (B) one or more U.S.
fiduciaries have authority to control all substantial decisions of the trust, or
(v) is otherwise subject to U.S. federal income tax on a net income basis in
respect of the stock.
EXCHANGE OF NEUTRINO SHARES FOR CASH
The exchange of Neutrino Shares for cash will require the recognition of
a gain or loss equal to the difference between the cash received, and the tax
basis in the Neutrino Shares surrendered. Such gain or loss will be a capital
gain or loss and will be a long-term capital gain or loss if the Neutrino Shares
were held for more than one year. For individuals, gain from the exchange will
be taxed at rates that vary depending upon whether the stock exchanged was held
for one year or less, more than one year but not more than 18 months, or more
than 18 months.
SUBSEQUENT TRANSACTIONS
The consequences to U.S. Holders of any Subsequent Acquisition
Transaction would depend upon the nature of the transaction and may be different
than the tax consequences arising from an exchange of Neutrino Shares for cash.
U.S. HOLDERS SHOULD CONSULT THEIR OWN INDEPENDENT TAX ADVISORS FOR ADVICE WITH
RESPECT TO THE INCOME TAX CONSEQUENCES TO THEM OF DISPOSING OF THEIR NEUTRINO
SHARES PURSUANT TO ANY SUBSEQUENT ACQUISITION TRANSACTION.
OWNERSHIP OF SECURITIES OF NEUTRINO
Neither Southern, nor any director or officer of Southern, beneficially
owns, directly or indirectly, or controls or exercises direction over, or has
the right to acquire, any securities of Neutrino, except pursuant to the Lock-up
Agreements. To the knowledge of the directors and senior officers of Southern,
no securities of Neutrino are owned by, directly or indirectly, nor is control
or direction over any securities of Neutrino exercised by, any associate or
affiliate of Southern, by any associate of any director or officer of Southern,
by any person or company who beneficially owns, directly or indirectly, more
than 10% of any class of equity securities of Southern or by any person or
company acting jointly or in concert with Southern.
TRADING IN SECURITIES OF NEUTRINO
During the six month period preceding the date of the Offer, no
securities of Neutrino have been traded by Southern or any director or officer
of Southern or, to the knowledge of the directors and senior officers of
Southern, by any associate or affiliate of Southern, by any associate of any
director or officer of Southern, by any person or company who beneficially owns,
directly or indirectly, more than 10% of any class of equity securities of
Southern or by any person or company acting jointly or in concert with Southern.
COMMITMENTS TO ACQUIRE SECURITIES OF NEUTRINO
No securities of Neutrino are the subject of any commitments made by
Southern, or its directors or officers
30
and, to the knowledge of the directors and senior officers of Southern, after
reasonable inquiry, no securities of Neutrino are the subject of any commitments
made by any associate or affiliate of Southern, by any associate of any director
or officer of Southern, by any person or company who beneficially owns, directly
or indirectly, more than 10% of any class of equity securities of Southern or by
any person or company acting jointly or in concert with Southern, to acquire
such securities, except for the commitment to acquire the Neutrino Shares
pursuant to the Offer and the commitments contained in the Merger Agreement and
the Lock-up Agreements.
Pursuant to the Merger Agreement, Neutrino has agreed to enter into
agreements with all or substantially all of the holders of Neutrino Options
whereby such holders will surrender their Neutrino Options to Neutrino for
cancellation in exchange for a cash payment. The aggregate cash consideration to
be paid by Neutrino in respect of such cancellations will not exceed $1,900,000
and such payments (and cancellations) are subject to the successful completion
of the Offer.
ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS
Other than as provided in the Merger Agreement and this Circular, there
are no contracts, arrangements or agreements made or proposed to be made between
Southern and any of the directors or officers of Neutrino and no payments or
other benefits are proposed to be made or given by Southern by way of
compensation for loss of office or as to such directors or officers remaining in
or retiring from office if the Offer is successful.
As Southern wishes to retain the expertise of Neutrino's management
team, Southern has entered or will enter into agreements with the four senior
officers of Neutrino pursuant to which such officers will remain employees of
Neutrino following the successful completion of the Offer. The terms of
employment offered by Southern Acquisition to Neutrino's senior officers are
consistent with industry standards and comparable to the terms under which such
officers are currently employed.
There are no business relationships between Southern and Neutrino (or
their respective associates or affiliates) that are material to any of them with
the exception of the Merger Agreement and the Lock-up Agreements.
MATERIAL CHANGES IN THE AFFAIRS OF
NEUTRINO AND OTHER INFORMATION
Southern Acquisition has no information which indicates any material
change in the affairs of Neutrino since the date of the last financial
statements of Neutrino, being the unaudited financial statements for the three
months ended March 31, 1998, other than the entering into of the Merger
Agreement.
Southern Acquisition has no knowledge of any other matter that has not
previously been generally disclosed but which would reasonably be expected to
affect the decision of Shareholders to accept or reject the Offer.
ACCEPTANCE OF THE OFFER
Other than the Shareholders who have entered into Lock-Up Agreements,
Southern Acquisition has no knowledge as to whether any Shareholders will accept
the Offer.
EXPENSES OF THE OFFER
Southern Acquisition estimates that if it acquires all of the Neutrino
Shares pursuant to the Offer, the total amount required to pay the related fees
and expenses of Southern Acquisition will be approximately $500,000. Such fees
and expenses will be paid out of the Credit Facility.
STATUTORY RIGHTS
Securities legislation in certain of the provinces and territories of
Canada provides Shareholders with, in addition to any other rights they may have
at law, rights of rescission or to damages or both, if there is
misrepresentation in a circular or notice that is required to be delivered to
such Shareholders. However, such rights must be exercised within prescribed time
limits. Shareholders should refer to the applicable provisions of the securities
legislation of their province or territory for particulars of those rights or
consult with a lawyer.
31
CONSENTS OF COUNSEL
TO: The Board of Directors of
779776 Alberta Ltd.
We hereby consent to the reference to our opinion contained under
"Canadian Federal Income Tax Considerations" in the Circular accompanying the
Offer dated May 29, 1998 made by 779776 Alberta Ltd.
to purchase all of the common shares of Neutrino Resources Inc.
Calgary, Alberta /s/ BURNET, DUCKWORTH & PALMER
May 29, 1998
32
APPROVAL AND CERTIFICATE
The contents of the Offer and the Circular have been approved and the
sending, communication or delivery thereof to the Shareholders has been
authorized by the Board of Directors of 779776 Alberta Ltd.
The foregoing, together with the documents incorporated herein by
reference, contains no untrue statement of a material fact and does not omit to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in the light of the circumstances in which it was
made. In addition, the foregoing, together with the documents incorporated
herein by reference, does not contain any misrepresentation likely to affect the
value or the market price of the securities which are the subject of the Offer.
DATED at Calgary, Alberta, the 29th day of May, 1998.
/s/ STEVEN H. MIKEL /S/ JAMES PRICE
President and Vice President, Finance and
Chief Executive Officer Chief Financial Officer
On behalf of the Board of Directors
/s/ STEVEN H. MIKEL (s) RODERICK A. FERGUSON
Director Director
OFFICES OF THE DEPOSITARY, MONTREAL TRUST COMPANY OF CANADA
BY MAIL
Stock Transfer Services
600 Western Gas Tower
530 - 8th Avenue S.W.
Calgary, Alberta
T2P 3S8
BY HAND AND BY FACSIMILE TRANSMISSION
TORONTO CALGARY
Stock Transfer Services Stock Transfer Services
151 Front Street West 600 Western Gas Tower
8th Floor 530 - 8th Avenue S.W.
Toronto, Ontario Calgary, Alberta
M5J 2N1 T2P 3S8
Telephone: (416) 981-9633 Telephone: (403) 267-6555
Fax: (416) 981-9600 Fax: (403) 267-6592
OFFICE OF THE DEALER MANAGER
Griffiths McBurney & Partners
Suite 310, 407 - 2nd Street S.W.
Calgary, Alberta
T2P 2Y3
Telephone: (403) 543-3030
Fax: (403) 543-3038
ANY QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED BY SHAREHOLDERS TO THE
DEALER MANAGER OR THE DEPOSITARY AT THEIR RESPECTIVE TELEPHONE NUMBERS AND
LOCATIONS SET OUT ABOVE.