PrefBlog

As noted in the post RF.PR.A Special Meeting Adjourned, the special meeting to decide on the reorganization of C.A. BANCORP CANADIAN REALTY FINANCE CORPORATION was adjourned from the original date of April 25, 2011 until tomorrow, May 5, 2011 at 4:00 p.m. EST, due to lack of quorum.

Now, Barry Critchley reports:

Pref shareholders are concerned with the credit risk they are being asked to assume if Green Tree acquires the management contract. In short, despite what C.A. Bancorp says about Green Tree’s “experienced team” and “enhanced infrastructure,” no one knows how successful the new team will be.

Can they run the commercial mortgage business well enough to generate enough income to continue to pay out on the prefs? Currently, pref shareholders receive fixed quarterly distributions of $0.4219 per share or 6.75% per annum. At the end of 2010, the fair value of the prefs was $31.1 million, or $21.18 per share.

But there’s more to it than that! There’s an external party opposed to the reorganization that has been scooping up shares in the present manager, CABancorp:

One investor, New York-based CDJ Global Catalyst, which owns 15.1% of C.A. Bancorp, said last week it disagrees with the realization strategy and indicated in a release it has had discussions and exchanged correspondence with C.A. Bancorp’s directors. CDJ, which also indicated it may “initiate proposals and/or transactions with a view to enhancing and protecting shareholder value,” couldn’t be reached for comment. It has been a steady buyer of C.A. Bancorp shares with its most recent purchase (251,400 shares) being bought at an average price of $2.16 a share. Book value is $2.53.

CDJ has been diligently writing press releases; the most recent, released April 27, is titled CDJ Announces Acquisition of Shares of C.A. Bancorp Inc.:

CDJ Global Catalyst LLC (“CDJ”) announced that from March 10, 2011 until April 26, 2011, CDJ acquired, for one or more of its managed client accounts in respect of which it exercises sole discretion, an aggregate of 251,400 common shares of C.A. Bancorp Inc. (TSX:BKP) (“CAB”) representing approximately 2% of the total issued common shares of CAB. The common shares were purchased for an average price of $2.16.

Combined with the shares held by client accounts in respect of which CDJ exercises sole discretion, CDJ now has control over 1,856,651 common shares, representing approximately 15.1% of the total issued and outstanding common shares of CAB.
…
CDJ intends from time to time to seek to continue to have discussions with representatives of CAB and its investee, C.A. Bancorp Canadian Realty Finance Corporation, (the “Subsidiary”).

CDJ strongly disagrees with CAB’s proposed Realization Strategy (as such term is defined in CAB’s public record), including the proposed sale of its interest in C.A. Bancorp Canadian Realty Finance Corp.

As a result, CDJ may, either alone or with others, consider and/or initiate proposals and/or transactions with a view to enhancing and protecting shareholder value, including the value of its investment to date. Such alternative proposals and/or transactions may include CDJ, either alone or with others, (i) seeking to influence decisions of CAB’s management and directors including, without limitation, by seeking representation by membership or through observer status on the board of directors or otherwise; (ii) seeking to add nominees designated by the Offeror to CAB’s board of directors, which could include expanding the size of the board of directors and/or removing individuals from CAB’s board of directors; and (iii) acquiring some or all of the outstanding securities of CAB or the Subsidiary. Such alternative proposals and/or transactions may also include CDJ supporting others in an alternative proposal and/or transaction.

CDJ may, from time to time and at any time, acquire additional common shares of CAB and/or its Subsidiary and/or other equity securities of the Company or the Subsidiary (collectively, the “Securities”) in the open market or otherwise and reserves the right to dispose of any and all of its Securities in the open market or otherwise, at any time and from time to time, and to engage in hedging or similar transactions with respect to the Securities.

At the present time, CDJ does not intend to acquire 20% or more of any class of Securities of the Company or the Subsidiary.

I continue to recommend that preferred shareholders vote “No” to the change in manager.

This entry was posted on Wednesday, May 4th, 2011 at 2:32 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.