Why would anyone sell their shares in Reno-based Glamis Gold Ltd.
for 12 percent less than they could get in the open market? That's the question after a Canadian company offered to pay Glamis shareholders $11.25 a share (Canadian) even though the stock was selling for $12.83 a share on the Toronto Stock Exchange.
The company that made the tender offer, Toronto-based TRC Capital Corp., has a long history of similar offers to shareholders of numerous companies.
Among the companies whose shares have been targeted are Goodyear, Imperia Oil, TRW, Imperial Oil, Alcan Aluminum and TrizecHahn.
In each situation, TRC Capital Corp.
offered to buy a relatively small percentage of the target company's shares.
The 3.5 million shares of Glamis it offered to purchase amount to 3.2 percent of the Reno company's outstanding shares.
Glamis officials were carefully noncommittal after the tender offer, but they noted:
* TRC can withdraw its offer at any time.
* TRC can delay payment for the share it buys.
* TRC can amend its offer in any way.
No telephone number is listed for TRC Capital Corp.
Other efforts by Northern Nevada Business Weekly to reach the company last week were unsuccessful.
The Securities and Exchange Commission has been watching similar offers closely for more than two years.
"Many investors who hear about mini-tender offers surrender their securities without investigating the offer, assuming that the price offered includes the premium usually present in larger, traditional tender offers.
But they later learn that they cannot withdraw from the offer and may end up selling their securities at below-market prices," the SEC's staff wrote in mid- 2000.
The SEC notes that mini-tender offers - those involving less than 5 percent of a company's outstanding shares aren't bound by the same disclosure rules as larger tender offers.
Glamis operates gold mines in North America and Central America.
