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Stetson Oil & Gas Ltd. And Stifel Nicolaus Canada Inc. 2013 ONCS 1300

Stetson is a junior oil and gas exploration company which trades on the TSX Venture Exchange. Thomas Wesiel Partners Canada Inc. (“Wesiel”) is an investment bank and securities dealer.

Stetson negotiated a “bought deal’ underwriting agreement by which Wesiel had agreed to purchase for resale 45,454,600 subscription receipts in the capital of Stetson at 55 cents per receipt (aggregate $26 million). The agreement did not close, and Stetson then made an agreement with a second firm for financing of $12 million (at 20 cents per share).

Stetson sued Wesiel alleging damages for breach of contract. We were retained by counsel for Stetson to quantify Stetson’s loss. We quantified the loss based on the difference between the value of the aborted deal and the closed deal. Damages were calculated on a per share basis to account for the dilution arising from the mitigation efforts whereby Stetson sold more shares for less money.

The Court agreed with our calculation.