GMP Capital Inc. has announced:
DIVIDENDS
The Company’s net working capital as at June 30, 2020 was $122.8 million. While this level of liquidity is sufficient to pay dividends, under Section 38(3) of the Business Corporations Act (Ontario), the Company’s governing corporate statute, the Company cannot pay a dividend if there are reasonable grounds for believing that the net realizable value of the Company’s assets would be less than the aggregate of its liabilities and its legal stated capital of all classes of shares (common and preferred).
Due to the current level of stated capital of the Company’s outstanding common and preferred shares, the Board of Directors has reasonable grounds to believe that this test would not be satisfied as at September 30, 2020, the date on which its quarterly preferred share dividend would normally be paid. As such the Company is suspending the dividends on its preferred shares. At its next meeting of common shareholders, the Company intends to seek the approval of its common shareholders to reduce the stated capital of the common shares to allow the Company to resume paying dividends, including accrued, unpaid dividends on the preferred shares.
Dividends on the outstanding preferred shares are cumulative and will continue to accrue in accordance with the rights, privileges, restrictions and conditions associated with each series of preferred shares.
Affected issues are GMP.PR.B and GMP.PR.C.
These issues have been on Review-Developing at DBRS for a long time, due to uncertainty regarding the proposed deal with Richardson GMP. It looks like the uncertainty became a lot more uncertain!
Of particular interest is the following quote (emphasis added):
At its next meeting of common shareholders, the Company intends to seek the approval of its common shareholders to reduce the stated capital of the common shares to allow the Company to resume paying dividends, including accrued, unpaid dividends on the preferred shares.
So there’s no indication as to how much of a reduction in stated capital the company will seek. A sharp reduction in stated capital at Aimia allowed the company to resume dividends on the common and to execute a Substantial Issuer Bid for that common, neither of which was good for the preferred shareholders.
Thanks to Assiduous Reader DR for bring this to my attention!
This entry was posted on Friday, July 31st, 2020 at 11:57 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
GMP To Suspend Preferred Share Dividends
GMP Capital Inc. has announced:
Affected issues are GMP.PR.B and GMP.PR.C.
These issues have been on Review-Developing at DBRS for a long time, due to uncertainty regarding the proposed deal with Richardson GMP. It looks like the uncertainty became a lot more uncertain!
Of particular interest is the following quote (emphasis added):
So there’s no indication as to how much of a reduction in stated capital the company will seek. A sharp reduction in stated capital at Aimia allowed the company to resume dividends on the common and to execute a Substantial Issuer Bid for that common, neither of which was good for the preferred shareholders.
Thanks to Assiduous Reader DR for bring this to my attention!
This entry was posted on Friday, July 31st, 2020 at 11:57 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.