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Wescast buyer misses deposit deadline

Sichaun Bohong was to pay a $2-million deposite by Sept. 19 as a sign of good faith


September 20, 2011
by The Canadian Press

BRANTFORD—The Chinese company looking to takeover Wescast Industries Inc. has missed the deadline for a required $2-million deposit to acquire the auto-parts manufacturer.

Wescast, however, has neither terminated the agreement nor waived its right to do so.

The Brantford-based company agreed to an offer of $13.60 per share from Sichuan Bohong in early September. With about 13.2 million Class A and B shares outstanding, the deal has been valued at $180 million.

The A shares closed yesterday at $11.05, which suggests there was some doubt in the market that the takeover will come to fruition even before Wescast’s announcement about the missed deadline.

Under the memorandum of understanding, Bohong has until Dec. 30 to negotiate a final deal to acquire Wescast.

Bohong was to pay the $2-million deposit by Sept. 19 as a sign of good faith, while it pursues financing from the China Development Bank.

The transaction hinges on a number of closing conditions, which includes approval from Wescast shareholders, the Ontario Superiour Court and regulators.

Wescast is controlled by the family of former company chairman Richard Levan through multiple voting class B shares, which aren’t traded publicly.