Spider Resources

I've read a lot of opinions opposing the merger because KWG is encumbered by the pre-emptive agreement that allows Cliffs to maintain 19.9% of the fully diluted capital if treasury shares are issued for financing purposes. According to KWG, this pre-emptive right does not apply under the terms of a purchase for shares, so the increase of outstanding shares will have the effect of diluting Cliffs to about 10%, post merger.

There's another thing that's going to change also, though. KWG will be transferring the Big Daddy asset into a wholly-owned subsidiary, which will be the same repository for the SPQ assets being merged. Does that not mean that the pre-emptive rights assigned by the parent KWG remain with the parent? In other words, wouldn't the subsidiary be liberated from any and all of those terms? So long as the parent ceases financings to run its operations, Cliffs would be frozen out?

Lar