Formation Metals Inc. (FCO.TO) said Friday that it considers the allegations made by Dundee Corp. (DC_A.TO) publicly and in its Petition to be without merit, to be designed to disrupt the business of the Company and to be brought for collateral purposes related to Dundee's previously announced intention to contest the election of directors at the upcoming Annual General and Special Meeting of the Company on June 21, 2013. Formation Metals said that the claims will be vigorously opposed.
Formation Metals announced on June 6, 2013, that it had entered into a binding Letter Agreement to sell, for US$9.0 million in cash, its Sunshine Precious Metals refinery, copper refinery and certain lands at the Big Creek Hydrometallurgical Complex in Shoshone County, Idaho, to certain entities that are associated or affiliated with Waterton Global Resource Management, Inc.
On June 10, 2013, Dundee issued a press release which disclosed certain opinions of Dundee in respect of the sale of the Complex to Waterton and the upcoming Annual General and Special Meeting of the Company. On June 13, 2013, Dundee filed a Petition in the Supreme Court of British Columbia against the Company, its directors and Waterton seeking to obtain a determination that the sale by the Company of the Complex to Waterton is a sale of all or substantially all of Formation's undertaking subject to approval of the Company's shareholders, under the Business Corporations Act, to obtain injunctions restraining the Company and Waterton from proceeding with the sale pending determination of that issue and seeking leave to commence a derivative proceeding against the directors of the Company based on allegations of breach of fiduciary duty.
The Court has set Dundee's claim for an interlocutory injunction and leave to commence the derivative action for hearing on June 19, 2013.
Formation Metals noted that the sale will permit the Company to re-pay its existing non Waterton US$5.0 million senior secured convertible promissory note, following which it will have no debt. The proceeds from the sale will also allow the Company to make progress at the flagship Idaho Cobalt Project and to evaluate additional opportunities already within the Company and in the market at large.
Formation Metals noted that it made the decision to enter into the Letter Agreement to divest itself of a non-core asset while substantially increasing its cash position, reducing operational and administrative expenses and eliminating its debt. Formation believes that the proposed sale is clearly in the best interests of the Company.
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