AER

Date of News
Release

Findings by the Court

AER's Response

December 11, 2015

"[48] The first press release AER issued following the Reasons was on December 11, 2015 ("December 11 Press Release"), the day following the issuance of my Reasons, but its disclosure was limited. AER did not advise of the findings I had made that the Black Sea Transaction: (a) was not procedurally and substantively fair and reasonable; (b) was oppressive to Jaguar; (c) was not in the best interests of AER; and (d) was structured to avoid shareholder approval. The press release did not advise that AER's directors had disclosable interests in respect of the Black Sea Transaction. Instead, the press release advised shareholders that the Black Sea Transaction could not complete until shareholders voted on it:

[T]he Court ruled, among other things, that AER cannot complete the acquisition of [Black Sea] until the transaction has been approved by the shareholders of AER at a special meeting of the shareholders. The Court will hear further submissions concerning a recent loan made by AER to [Black Sea]. Refer to the AER News Releases dated November 26, 2015, and December 3, 2015 for additional details.

AER disagrees with the Court's findings set out at (a) through (d). They are subject to the pending appeal.

AER disagrees that its directors had a disclosable interest in the Black Sea Transaction other than Mr. Cooper who appropriately disclosed that interest.  This issue is subject to the pending appeal.

[49] As I noted, I ordered AER to issue an "appropriate" press release. Although I did not specify the exact contents, there could be no misapprehension that an accurate summary of the findings, determinations, orders, and direction contained in the Reasons was required in light of the requirements of the TSX Policy and the National Policy, and especially in light of the remarks that I made at para. 100 of the Reasons.

AER filed the written Reasons for Judgment for the First Petition on SEDAR on December 23, 2015, the day after those Reasons were available.

[50] As well, the December 11 Press Release was misleading because it referred to, and relied upon, the accuracy of two prior press releases that AER had issued on November 26 and December 3, 2015. In light of the findings in my Reasons, the respondents knew or ought to have known that key portions of those two press releases could no longer be held out as accurate."

AER disagrees with the findings of the Court that it says makes portions of those two press releases inaccurate. Those findings are subject to the pending appeal.

November 26, 2015

"[51] I will start with AER's November 26, 2015 press release. It advised shareholders that Jaguar's allegations against the respondents in respect of the Black Sea Transaction, made in the First Petition and in a press release, contained "a litany of false statements". The news release also reported that AER and its board "have fully complied with their fiduciary obligations to AER throughout" and "fully complied with the applicable provisions of corporate legislation, securities regulation, Exchange policies and appropriate corporate governance practices concerning" the Black Sea Transaction and AER's obligation to hold an AGM. The findings that I made in the Reasons were to the contrary. As a result, AER's continued reliance on the purported truth of its earlier statements in the press release issued immediately following the Reasons, gave an inaccurate and misleading impression of both Jaguar's conduct and the respondents' conduct in respect of the Black Sea Transaction."

AER's position is that Jaguar's allegations are false and that AER and its directors have fully complied with all relevant laws and obligations.  The Court's findings to the contrary do not change that position.  Those findings are subject to the pending appeal.

December 3, 2015

"[52] AER's other press release issued on December 3, 2015 was, itself, misleading ("December 3 Press Release"). AER reported that its AGM was "deferred", with an extension given by the Registrar of Companies until early 2016, "pending completion of due diligence" of the Black Sea Transaction. AER also advised that it "has convened an annual and special meeting of shareholders of AER" to be held "on February 26, 2016". Those statements were not true. AER's board of directors did not seek an extension of the AGM from the Registrar of Companies in order to carry out due diligence. The board had already approved the Black Sea Transaction by October 3, 2015, which was well before it sought the extension. Further, AER had not convened the AGM for February 26. Apart from setting the record date (which I discuss in a later section) after the First Petition was issued, AER did not take any of the steps necessary to proceed with the AGM until well after Jaguar commenced this petition. By relying on the December 3 Press Release in the manner that it did in the December 11 Press Release, AER continued to convey to shareholders the misleading impression that its contents were true."

At the time the deferral of the AGM was granted due diligence regarding the share ownership of Black Sea was not complete.

At the time of this press release AER had set the date for the AGM for February 26, 2016.  It had not omitted taking any steps necessary for the meeting to proceed as scheduled.

The Court's findings to the contrary are subject to the pending appeal.

December 24, 2015

"[55] On December 24, 2015, AER issued a further press release ("December 24 Press Release"). In it, AER stated its purpose was to "provide context for existing shareholders and potential new investors with an overview of their business plan and actions over the past 18 months". The December 24 Press Release went on at considerable length to explain the Black Sea Transaction in a manner that was, I am satisfied, an attempt to justify the merits of it and the basis on which the extension was obtained from the Registrar of Companies. That press release was also critical of Jaguar's conduct and motives.

[56] The respondents are correct when they state that the December 24 Press Release disclosed some of the findings contained in the Reasons. They were, however, mentioned briefly, and only to explain that: (a) AER could not complete the Black Sea Transaction without shareholder approval at a special meeting of shareholders; (b) the Black Sea Transaction was found not to be fair and reasonable to AER; and (c) the relief sought by Jaguar was granted.

[57] Otherwise, and despite my findings in the Reasons, the December 24 Press Release sent a clear message that the respondents had acted properly in respect of the Black Sea Transaction, both before and after the Reasons were issued, and that they would continue to act in a manner to protect shareholders' best interests.

[58] I agree with Jaguar that the December 24 Press release was misleading in view of my findings in the Reasons. For example, it stated that:

AER's position is unchanged. AER disagrees with the Court's findings to the contrary.

(a) a special committee appointed by AER's board to review the Black Sea Transaction "was comprised of disinterested directors", even though I had determined that the members of the committee (who were AER's other two directors) had allowed themselves, prior to their appointment to the special committee, to be influenced by a co-director, the respondent Mr. Cooper, who was also an officer and director of Black Sea and one of its related companies, who stood to benefit from the Black Sea Transaction;

AER disagrees with this finding, as well as with the proposition that its special committee was placed into a conflict due to hearing a presentation by a director who had disclosed his interest in the transaction.

(b) Mr. Cooper "was not involved in the assessment, consideration, or voting in relation to the Black Sea" Transaction, even though I had determined that he was allowed to influence the special committee by making a full presentation to them about its merits;

AER's position is unchanged and it disagrees with the Court's finding.

(c) the special committee had retained a consultant to review the merits of the proposed Black Sea Transaction, even though I had found that AER's board of directors had decided to proceed with the Black Sea Transaction by no later than October 3, 2015; and

AER's position is unchanged and it disagrees with the Court's finding.

(d) the rationale for obtaining an extension to hold the AGM in 2016 was to avoid the costs of holding two shareholders' meetings (i.e., an annual general meeting in November 2015 and a subsequent one to vote on approval of the Black Sea Transaction), even though I had rejected that rationale in the Reasons as inaccurate and despite the fact that the terms of the Black Sea Transaction itself mandated that shareholder approval must not be required.

AER's position is unchanged and it disagrees with the Court's finding.

[59] The December 24 Press Release was also misleading because it gave the impression that AER and its board of directors had acted properly in respect of its due diligence obligations concerning the Black Sea Transaction when they commissioned a technical report required by the TSX Venture Exchange (which is called an "NI 43-101" report). The NI 43-101 report was, however, commissioned after the respondents had approved of the Black Sea Transaction. Further, the contents of the NI 43-101 report established that the Black Sea Transaction was off-side AER's business objective to acquire advanced stage mineral projects. The NI 43-101 report disclosed that there "are no mineral resources or mineral reserves estimated" for the mineral property that was to be acquired, that there had been no mineral processing or metallurgical testing done on it, that no follow-up drilling had taken place since the 1980s, and that a further $570,000 was required to be spent to determine if "further exploration was warranted." None of that information was contained or referred to in the December 24 Press Release."

AER's position is unchanged and it disagrees with the Court's finding.

All of the findings referred to above are subject to the pending appeal.