Court Approves Norske Canada Acquisition of Pacifica Papers

In late August 2001, Pacifica Papers and Norske Skog Canada Limited won their running court battle with a large minority shareholder of Pacifica Papers over the Norske Canada acquisition of Pacifica Papers. The shareholder attempted to block the acquisition by bringing an oppression action against Pacifica Papers and its chairman with respect to the negotiation of the terms of the acquisition. The shareholder also opposed the “fairness hearing” required to approve the acquisition, which took place pursuant to a plan of arrangement (see this month's Big Deals).
In May, the dissident shareholder opposed the mailing of the Pacifica information circular to security holders, but the British Columbia Supreme Court found in favour of Pacifica and approved the mailing of the circular. The British Columbia Court of Appeal refused leave to appeal from, and refused a stay of that decision.

In June 2001, the security holders of Pacifica voted 74 per cent in favour of the acquisition but the dissident shareholder continued to oppose the acquisition. In the fairness hearing before the British Columbia Supreme Court it alleged that the acquisition was unfair to Pacifica securityholders, arguing (among other things) that Pacifica should have held a formal auction prior to agreeing to the transaction with Norske Canada and that Pacifica had breached the proxy solicitation rules in the Canada Business Corporations Act.

In July, after an unprecedented two-week fairness hearing, the British Columbia Supreme Court concluded that the terms of the acquisition were fair to Pacifica security-holders, approved the plan of arrangement and dismissed the oppression action. In August, the dissident shareholder appealed to the British Columbia Court of Appeal, which denied the appeal after a two-day hearing. The dissident shareholder also sought a stay of the British Columbia Supreme Court's and the British Columbia Court of Appeal's orders, which was denied by the Supreme Court of Canada. The acquisition of Pacifica was completed on August 27, 2001.

Pacifica Papers was represented in the litigation by Michael Carroll, Q.C. and Michael Stephens of Davis & Company, James Doris, Andrea Burke and Brian Smith of Davies Ward Phillips & Vineberg LLP and Harjit Sangra and Kim Moller of Sangra, Moller. The chairman of Pacifica was represented by Barry Kirkham, Q.C. and Daniel W. Burnett of Owen Bird. Brian Wallace, Q.C. and Craig Ferris of Lawson Lundell represented Norske Canada. Peter Griffin and Lawrence Thacker of Lenczner Slaght Royce Smith Griffin acted for Director Wayne Nystrom. Grant Haynen, Heidi Visser and Dexter John of Donahue Ernst & Young LLP acted for Joyce Johnson-Miller, a dissident director.