Dolly Varden successfully advances business plan in the face on an unsolicited bid from Hecla Mining

Strategic Financial Advisory
Transaction Details

Fort Capital Partners is pleased to announce that Dolly Varden Silver Corporation was successful in obtaining securities commission approval for a private placement of securities in the face of opposition from Hecla Mining Company, which had made an unsolicited offer to purchase Dolly Varden. Fort Capital acted as financial advisor to the Special Committee of Dolly Varden, including providing expert testimony in the joint hearing of the BCSC and OSC.

Background – On June 27, Hecla announced its intention to make a take-over bid at $0.69 per share for all of the shares of Dolly Varden it does not own.  Subsequently, Dolly Varden announced that it would issue 7.3 million common shares at $0.62 per share and 2.1 million flow-through shares at $0.70 per share, with proceeds to be used to repay debt and fund future exploration. Hecla alleged that Dolly Varden’s placement was a defensive strategy, and filed an application with the BCSC to cease trade the placement. When Hecla formalized its take-over bid, Dolly Varden filed an application with the OSC to cease trade the offer, claiming the circular for the insider bid did not include a Formal Valuation as required by Multilateral Instrument 61-101.

Dolly Varden was successful in both matters put before the regulators. On July 25, Hecla’s application to cease trade the private placement was dismissed; at the same time, the OSC cease traded Hecla’s take-over bid, requiring that an amended circular, including Formal Valuation, be delivered to Dolly Varden shareholders. Hecla subsequently dropped its bid and Dolly Varden completed its private placement, raising gross proceeds of $7.2 million. Despite its objection to the offering, Hecla subscribed for its pro rata share of the private placement.

The take-over bid rules in Canada changed significantly in May 2016, and the Dolly Varden-Hecla decision attracted significant attention across Canada as the first case addressing an alleged used of a private placement as a “defensive tactic” against an unsolicited bid.

Dolly Varden Silver Corporation is a mineral exploration company focused on the exploration of the Dolly Varden silver property located in northwestern British Columbia. The entire Dolly Varden property is considered to be highly prospective for hosting high-grade precious metal deposits, since it comprises the same structural and stratigraphic setting that host numerous other on-trend, high-grade deposits, such as Eskay Creek and Brucejack. The Company’s common shares are listed and traded on the TSX Venture Exchange under the symbol DV and on the OTCBB system under the symbol DOLLF.

Fort Capital Inc. is an investment bank that works with public and private companies in Canada. The firm draws from collective capital markets experience to provide its clients with proven, accessible and independent investment banking advice and transaction execution.  For more information, visit fortcapital.ca.

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