Century Mining Shareholders Seek Regulator Rejection of the Proposed Merger Due to Violations

July 12, 2011 - PRLog -- StockIgloo, representing a group of minority Century Mining shareholders, is requesting that the Ontario Securities Commission, the BC Securities Commission, the TSX, and the TSX-V deny the required approval of a Plan of Arrangement (Business Combination) between Century Mining Corporation (“Century”) and White Tiger Gold (“White Tiger”). We are making this request due to the fact that Century was in violation of both section 105(3) of the Canadian Business Corporations Act (“CBCA”) and the Century Shareholders Agreement (“Agreement”).  

Background(January 24, 2011 - February 22, 2011):

The SEDAR document titled "First Loan Agreement" filed on March 21, 2011 states "The Lender(White Tiger) and the Borrower(Century) have entered into a letter of intent dated January 24, 2011 ... pursuant to which the Lender(White Tiger) made a non-binding proposal to acquire all of the issued and outstanding securities of the Borrower(Century) pursuant to a share exchange take-over bid or plan of arrangement."

The "Arrangement Agreement" filed by Century on SEDAR states that “White Tiger and Century have previously entered into a non-binding restated and amended letter agreement, dated February 17, 2011 and accepted and agreed to by Century on February 18, 2011 (the “Letter Agreement”) establishing the general terms for such acquisition;”

On February 22, 2011, both Century and White Tiger filed on SEDAR the notice for the Plan of Arrangement special meeting (titled “A Notice of the Meeting and Record Date”) for the respective shareholders of each company. Both documents are identical in naming April 12, 2011 as the meeting date and March 8, 2011 as the record date for voting and the notice. Of note, the respective shareholder special meetings, with regards to the Plan of Arrangement, have since been pushed back to August 19, 2011 as filed on SEDAR by both companies.

Commentary:

During the stated time period, Century had five directors on its board and only one of those directors was a Canadian resident. This is an indisputable violation of section 105(3) of the CBCA which states  “at least twenty-five percent of the directors of a corporation must be resident Canadians.” While it is understood that this requirement may not be met temporarily due to circumstances such as resignation or death, this was not the case for Century. In fact, Century failed to nominate the required number of Canadian directors for the previous AGM on June 11, 2010 . Century was in violation of the CBCA throughout the whole process of conceiving, planning, negotiating and agreeing to the terms of the Plan of Arrangement.

Shareholders Agreement:

The “Shareholders Agreement”, dated December 29, 2009 and filed by Century on SEDAR, states in section 4.1(a)(ii) : “at the first meeting of the shareholders of the Company following the date of this Agreement, the number of directors shall be increased to seven.”  The Agreement specified that the board include an independent Chairman as one of the seven directors.

Commentary:

Not only did Century fail to nominate seven directors for the June 11, 2010 AGM in accordance with the Agreement, but of the six directors nominated, there was no independent Chairman nominated and only one of the six nominees was a Canadian resident. Furthermore, when Margaret Kent, former Chairman and CEO, resigned from the board of directors on July 28, 2010, a majority of the remaining directors were Maxim Finskiy (White Tiger Executive Chairman) nominees. The Century board was improperly constituted, thus in violation of the Agreement, when they unanimously agreed to the Plan of Arrangement. The Century board continues to be in violation of the Agreement as of the writing of this document.

It is our expectation that the OSC, BCSC, TSX, and the TSX-V will deny the required approval of the Plan of Arrangement in the face of these clear, indisputable and willful violations of both the CBCA and the Century Shareholders Agreement. Century’s actions were in violation of the CBCA and the Shareholders Agreement preceding and during the course of planning, initiating, amending and agreeing to the Plan of Arrangement.