Some former shareholders of Baffinland Iron Mines Corp. are launching a class-action lawsuit against the company, alleging that they did not get all the information they needed in a bidding war that led to the company's takeover.
The Ontario-based lawsuit, which seeks $800 million in damages, claims there were omissions or misstatements in documents filed ahead of Baffinland's purchase by ArcelorMittal SA and Nunavut Iron Ore Acquisition Inc. earlier this year.
ArcelorMittal and Nunavut Iron were originally bidding rivals, but they later joined forces to acquire Baffinland, a Toronto-headquartered company that is developing its Mary River iron deposit in Nunavut.
The lawsuit is being launched on behalf of people who sold their shares in Baffinland to ArcelorMittal and Nunavut Iron Ore, said Dimitri Lascaris, a London, Ont.-based lawyer who is handling the case.
"[The] price at which the shares were acquired was unreasonably low, [in] no small part because the acquirer and the board of Baffinland — it is alleged — did not make full and fair disclosure of all facts that were material to the decision whether or not to tender their shares," Lascaris told CBC News on Wednesday.
Under a joint offer that valued Baffinland at about $590 million, the two buyers agreed to split ownership, with ArcelorMittal owning 70 per cent and the rest owned by Nunavut Iron Ore.
Project under environmental review
The takeover was completed in March and Baffinland's shares have since been delisted from the Toronto Stock Exchange.
The Mary River project, which is believed to have one of the world's largest untapped iron ore deposits, is located about 160 kilometres south of Pond Inlet, Nunavut, on northern Baffin Island.
Baffinland's application to develop the Mary River site is currently being reviewed by the Nunavut Impact Review Board.
The board is currently touring communities around Nunavut's Baffin region to gather public feedback on Baffinland's draft environmental impact statement for the Mary River project.
The company's impact statement — a 5,000-page, 10-volume report — claims that a mine at Mary River would have no significant impact on the northern environment.
Only a handful of people attended the review board's community meeting Tuesday night in Iqaluit. Another meeting is being held Wednesday afternoon until 5 p.m. ET at the Parish Hall.