Court Approves Supplemental Final Distribution in Kinross – Kinam Preferred Class Action Litigation
In an Order entered on October 15, 2010, the United States District Court for the District of Nevada approved a final supplemental distribution from the net settlement fund in the class action litigation against Kinross Gold Corporation over the Kinam $3.75 Series B Preferred Stock.
Supplemental Notice re Kinross – Kinam Preferred Class Action Litigation
Pursuant to an ORDER of the UNITED STATES DISTRICT COURT for the DISTRICT OF NEVADA in BROWN v. KINROSS GOLD U.S.A., INC., CV-S-02-0605-PMP-(RJJ), the following supplemental notice is hereby posted:
Court Approves Settlement of Kinross – Kinam Preferred Class Action Litigation
In a series of Final Orders entered on January 29, 2009, the United States District Court for the District of Nevada approved settlement of the class action litigation against Kinross Gold Corporation over the Kinam $3.75 Series B Preferred Stock on the terms set forth in the Notice dated November 15, 2008.
Under the Plan of Allocation, members of the tenderor subclass are expected to receive, net of legal fees and expenses, an additional payment of approximately $16.50 for each Kinam preferred share tendered into the 2002 tender offer. This payment is in addition to the $16/share paid in 2002 under the offer, bringing the total payment for each Kinam preferred share tendered to approximately $32.50, an amount that compares quite favorably to the dollar value of $25.80/share received by Franklin Funds for the Kinam preferred exchanged in mid-2001 with Kinross for its common shares. Indeed, the difference between $32.50 and $25.80, or $6.70, more than covers cumulative interest at the Nevada statutory rate on the difference between $25.80 and $16, or $9.80, over the nearly seven year period since the tender offer.
For each Kinam preferred share held at the date of the court’s approval of the settlement, members of the holder subclass are expected to receive, net of legal fees and expenses, a payment of approximately $42. This amount is in addition to total dividend payments of $31.875/share, which represent the cumulative arrearages paid in July 2007 on suspended dividends since August 2000 plus all subsequent dividends through November 2008. Under the terms of the settlement and effective as of its approval by the court, all remaining Kinam preferred shares are canceled. When this litigation was commenced in the wake of the 2002 tender offer, not only had the Kinam preferred been delisted, but also holders faced the almost certain prospect of being forced out at (or possibly even below) the $16/share tender offer price. For the conversion value of the Kinam preferred (at 1:1.617) to match the $42/share settlement price, Kinross common would have to trade at almost $26/share. To put the $50/share redemption price in the money, Kinross common would have to trade at almost $31/share.
All members of the plaintiff class, both tenderors and holders, are reminded that the deadline for submitting claims is March 31, 2009. In light of the substantial recoveries achieved for their benefit, they are encouraged to do so as soon as practicable. Any questions should be addressed to the claims administrator:
Claims Administrator, c/o Heffler, Radetich & Saitta LLP, 1515 Market St., Ste. 1700, Philadelphia, PA
19102, by calling 1-800-528-7199, or on the Internet at www.hrsclaimsadministration.com.
Finally, a special note of appreciation is warranted for the excellent work by the Philadelphia law firm of Berger & Montague in this case, and particularly by its partners Merrill Davidoff and Michael Dell’Angelo. Although sometimes used disparagingly today, the expression “Philadelphia lawyer” dates from colonial times, when it represented high praise for the legal expertise and competence of an attorney. And in that original sense, it well and truly describes these gentlemen even were they not from the City of Brotherly Love. Further underscoring their professionalism, they do not confine themselves to representing plaintiffs exclusively, and in 2007 won a motion to dismiss a purported class action against a well-known gold mining company by disgruntled shareholders alleging violations of the federal securities laws. See In re DRDGOLD Ltd. Securities Litigation, 472 F.Supp.2d 562 (S.D.N.Y. 2007).
Summary Notice and Notice re Proposed Settlement of Kinross – Kinam Preferred Class Action Litigation
Pursuant to an ORDER of the UNITED STATES DISTRICT COURT for the DISTRICT OF NEVADA in BROWN v. KINROSS GOLD U.S.A., INC., CV-S-02-0605-PMP-(RJJ), the following notices are hereby posted:
- 11/18/2008 – SUMMARY NOTICE OF CLASS ACTION CERTIFICATION, PROPOSED CLASS ACTION SETTLEMENT, MOTION FOR ATTORNEYS’ FEES AND NONTAXABLE COSTS, AND HEARING THEREON
- 11/18/2008 – NOTICE OF CLASS ACTION CERTIFICATION, PROPOSED CLASS ACTION SETTLEMENT, MOTION FOR ATTORNEYS FEES AND NONTAXABLE COSTS, AND HEARING THEREON
Kinross News Release (11/05/2008) Reports Proposed Settlement of Litigation over Kinam Preferred
In a news release dated November 5, 2008, Kinross Gold Corporation announced its unaudited results for the three and nine months ended September 30, 2008, including the following disclosure with respect to a proposed settlement of the pending class action relating to the Kinam $3.75 Series B Preferred Stock:
Litigation settlement costs
On April 26, 2002, the Company was named as a defendant in a Class Action Complaint filed in connection with a 2002 tender offer by Kinross Gold U.S.A., Inc. (“KGUSA”) to purchase the Kinam Gold, Inc. (“Kinam”) $3.75 Series B Preferred Stock (the “Kinam Preferred Shares”) not then owned by KGUSA.
The parties have entered into a memorandum of understanding to settle all claims in the litigation for an aggregate cash payment by the Company to the plaintiff class of $29.25 million (settlement amount), inclusive of any fees and costs, without admission of any fault or liability. The proposed settlement is subject to court approval, objections or appeal by the plaintiff class and termination at the option of the Company, if 10% or more of the total number of the Kinam Preferred Shares represented by the class opt out of the settlement. The settlement terms include a minimum payment of $10.25 million of the settlement amount for the termination, cancellation or redemption of the Kinam Preferred Shares currently held by the plaintiff class and the continued payment by Kinam of quarterly dividends on the Kinam Preferred Shares until the settlement is approved by the court. Such approval is expected to be obtained on or before February 15, 2009.
The Company recorded a charge of $19.1 million respecting this settlement.