SU » Topics » General Impact of the 2005 Rights Plan

This excerpt taken from the SU 6-K filed Mar 30, 2005.
General Impact of the 2005 Rights Plan


By maintaining a shareholder rights plan, it is not the intention of the Board of Directors to entrench itself or management in office, nor is it to avoid a bid for control of Suncor in a transaction that is fair and in the best interest of shareholders. For example, through the Permitted Bid mechanism, described in more detail in Appendix C to this circular, shareholders may tender to a bid that meets the Permitted Bid criteria without triggering the 2005 Rights Plan, regardless of the acceptability of the bid to the Board of Directors. Furthermore, even in the context of a bid that does not meet the Permitted Bid criteria, the Board of Directors will continue to be bound to consider fully and fairly any bid for our common shares in any exercise of its discretion to waive application of the 2005 Rights Plan or redeem the Rights. In all such circumstances, the Board of Directors must act honestly and in good faith with a view to the best interests of Suncor and its shareholders.


Neither the Original Rights Plan nor the 2005 Rights Plan was adopted or approved in response to or in anticipation of any pending or threatened takeover bid, nor to deter takeover bids generally. As of the date of this circular, the Board of Directors was not aware of any third party considering or preparing any proposal to acquire control of the Corporation. Rather, the objectives of the 2005 Rights Plan remain the same as they were for the Original Plan, as summarized above.


The 2005 Rights Plan will not interfere with our day-to-day operations. The issuance of the Rights does not in any way alter our financial condition, impede our business plans or alter our financial statements. In addition, the 2005 Rights Plan is not initially dilutive and is not expected to have any effect on the trading of common shares. However, if a Flip-In Event occurs and the Rights separate from the common shares, as described in Appendix C, reported earnings per share and reported cash flow per share on a fully-diluted or non-diluted basis may be affected. In addition, holders of Rights not exercising their Rights after a Flip-In Event may suffer substantial dilution.




The 2005 Rights Plan will not preclude any shareholder from utilizing the proxy mechanism of the Canada Business Corporations Act to promote a change in the management or direction of Suncor, and has no effect on the rights of holders of outstanding voting shares of the Corporation to requisition a meeting of shareholders, in accordance with the provisions of applicable corporate and securities legislation, or to enter into agreements with respect to voting their common shares. The definitions of “Acquiring Person” and “Beneficial Ownership” have been developed to minimize concerns that the 2005 Rights Plan may be inadvertently triggered or triggered as a result of an overly-broad aggregating of holdings of institutional shareholders and their clients.


In summary, the Board of Directors believes the dominant effect of the 2005 Rights Plan will be to enhance shareholder value and ensure equal treatment of all shareholders in the context of an acquisition of control.


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