PrefBlog

Dundee Corporation has announced:

that it has received confirmation of support from a few of the largest investors that hold an aggregate of 590,700 Cumulative 5-Year Rate Reset First Preference Shares, Series 2 in the capital of the Corporation (the “Series 2 Shares”) who have agreed to tender all such Series 2 Shares to the Corporation’s previously announced substantial issuer bid (the “Offer”) at a price of $19.50 per Series 2 Share. As a result, the Corporation intends to mail and file a notice of variation in accordance with applicable Canadian securities laws on or before August 27, 2020 to amend the Offer to: (i) increase the price payable per Series 2 Share to a fixed price of $19.50 (the “Amended Purchase Price”); and (ii) increase the aggregate number of Series 2 Shares subject to the initial Offer from $44,000,000 in value to all of the issued and outstanding Series 2 Shares, representing approximately $61,000,000 in value based on the Amended Purchase Price. The Offer was initially made by way of a “modified Dutch auction”, which would have allowed holders who chose to participate in the initial Offer to individually select the price, within a price range of not less than C$16.00 and not more than C$18.50 per Series 2 Share, at which to tender.

In addition to the Amended Purchase Price, Shareholders who have Series 2 Shares taken up and paid for by the Corporation pursuant to the amended Offer will be entitled to receive a portion of the $0.33025 dividend declared by the Board of Directors on such Series 2 Shares for the quarter ended September 30, 2020. As an example, assuming the amended Offer expires on September 8, 2020 and the Series 2 Shares are taken up and paid for by the Corporation on September 10, 2020, the accrued dividend amount payable per Series 2 Share validly tendered, taken up and paid for under the amended Offer is estimated to be approximately C$0.26.

As a result of the variation in the terms of the Offer, the amended Offer will now expire at 5:00 p.m. (Toronto time) on September 8, 2020 or such later time and date to which the amended Offer may be extended by Dundee, unless varied or withdrawn by Dundee.

The Board of Directors of the Corporation will continue to review various options for the allocation of capital. Throughout 2019 and during 2020 to date, the Corporation has continued to implement its strategy of rationalizing its portfolio of investments and monetizing non-core assets as it exits business lines which are no longer deemed to be aligned with its longer-term strategy, while remaining committed to creating value for the Corporation and considering opportunities that might present themselves, including potential returns to shareholders of the Corporation. In line with the Corporation’s longer-term strategy and commitment to creating value for the Corporation, the Board believes that the purchase of Series 2 Shares under the amended Offer represents an attractive investment opportunity for Dundee and will be welcomed by certain holders of Series 2 Shares who may wish to reduce their share ownership positions.

“We believe that the amended purchase price gives greater certainty for a successful bid, which locks in long term value for our shareholders,” said Jonathan Goodman, Chairman and CEO.
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As a result of the amendments to the terms of the Offer, if a shareholder has previously tendered Series 2 Shares, such tender is no longer valid, and the shareholder WILL BE REQUIRED TO PROPERLY RETENDER THEIR SERIES 2 SHARES to accept the amended Offer. For greater certainty, any and all Series 2 Shares previously tendered will be deemed to be withdrawn, and the shareholder must take additional steps if they wish to participate in the amended Offer.

I don’t know how the requirement to retender shares will interact with procedures at the various brokerages; those who have tendered are urged to contact their brokers and ensure that their shares are properly retendered.

The original Normal Course Issuer Bid (a Dutch Auction) was discussed on PrefBlog. Thanks to Assiduous Reader Dan Good for bringing this amendment to our attention.

DBRS has announced that it:

maintained the Under Review with Developing Implications status on GMP Capital Inc.’s (GMP or the Company) Cumulative Preferred Shares rating of Pfd-4 (high). DBRS Morningstar has maintained this status since June 18, 2019, given the lack of clarity on the ultimate composition and financial fundamentals of the Company.
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On August 13, 2020, GMP announced that it had entered into a definitive purchase agreement with RFGL to consolidate 100% ownership of RGMP under GMP. Under the terms of the agreement, GMP will acquire all common shares of Richardson GMP that it does not already own (65.9% stake) for a purchase price of 1.875 GMP common shares (originally two GMP common shares) per one common Richardson GMP share. Following the impact of the coronavirus pandemic, RBC Capital Markets, LLC (RBC) revised its valuation of Richardson GMP from $500 million to $420 million. Accordingly, they concluded that the common shares now carry a value between $3.55 to $4.50 (previously $4.25 to $5.15) while GMP common shares carry a value of between $2.00 to $2.55 (previously $2.20 to $2.90) on an en bloc basis.

Furthermore, GMP will pay a special dividend of $11.3 million to the preclosing GMP shareholders and will resume paying quarterly dividends on its outstanding preferred shares following the special meeting, while $36 million in retention payments will be made to Richardson GMP’s investment advisors upon closing of the transaction. Additionally, Richardson Financial will not redeem its $32 million preferred share ownership in order to invest in the growth in the new business; instead, their preferred share terms will be amended to add a right to redeem the preferred shares for cash any time following the third anniversary of closing. The DBRS Morningstar-rated Cumulative Preferred Shares will remain with the consolidated entity.

GMP has called a special meeting of common shareholders on October 6, 2020, to approve the transaction, which would require a majority of the minority shareholders (excluding RFGL) to vote in favour of the proposal. GMP will subsequently require regulatory approval from the Investment Industry Regulatory Organization of Canada. The transaction is expected to close in the fourth quarter of 2020.

Following the approval of the transaction, RFGL is expected to have the largest ownership interest representing 40% of the consolidated entity. GMP shareholders and the Richardson GMP investment advisors and management would retain 31.4% and 28.5%, respectively.

KEY RATING CONSIDERATIONS
The continued Under Review period considers that even though the transaction’s parties have reached a definitive agreement the consolidation of GMP with Richardson GMP is still subject to shareholder and regulatory approval. DBRS Morningstar will assess GMP’s pro forma structure once it consolidates full ownership of Richardson GMP. This assessment will review the Company’s assets and liabilities composition, ownership, future strategic direction, and management’s ability to execute on this plan. If the consolidation were not to occur, DBRS Morningstar would need to assess GMP’s standalone intrinsic strength, including its credit fundamentals, prospects for growth, and ability to maintain debt service payments on its Cumulative Preferred Shares.

The last extension of the Review-Developing status was in June, 2020. The suspension of dividends was announced on July 31, 2020.

Emera Incorporated has announced:

that 128,610 of its 3,864,636 issued and outstanding Cumulative Rate Reset First Preferred Shares, Series A (the “Series A Shares”) were tendered for conversion, on a one-for-one basis, into Cumulative Floating Rate First Preferred Shares, Series B (the “Series B Shares”) and that 1,130,788 of its 2,135,364 issued and outstanding Series B Shares were tendered for conversion, on a one-of-one basis, into Series A Shares. As a result of the conversion, Emera has 4,866,814 Series A Shares and 1,133,186 Series B Shares issued and outstanding. The Series A Shares and the Series B Shares will continue to be listed on the Toronto Stock Exchange (“TSX”) under the symbols EMA.PR.A and EMA.PR.B, respectively.

EMA.PR.A was issued as a FixedReset, 4.40%+184, that commenced trading 2010-6-2 after being announced 2010-5-25. Extension was announced in 2015 and a reset to 2.555% announced. I receommended against conversion, but there was a 36% conversion to EMA.PR.B anyway. Notice of extension was provided on 2020-7-9. EMA.PR.A reset at 2.182% effective 2020-8-15.

EMA.PR.B is a FloatingReset, Bills+184, that became extant in 2015 via a 36% conversion from EMA.PR.A.