POW.PR.F Sinking Fund, Part 2

Assiduous Readers with good memories will remember the Mystery of the POW.PR.F Sinking Fund; the company is “make all reasonable efforts to purchase for cancellation on the open market 20,000 shares per quarter, such number being cumulative only in the same calendar year,”, but the quota was not fulfilled in 2008 or in any of the past three calendar years.

So I wrote a letter:

In the prospectus and as summarized on your website, POW.PR.F has a sinking fund provision by which Power Corporation is required to make its best efforts to purchase 80,000 shares per annum of this issue.

I note that, as disclosed in your Annual Reports, purchases have actually been as follows:
2013 12,000 shares
2012 40,000 shares
2011 77,300 shares
2010 80,000 shares
2009 80,000 shares
2008 60,000 shares

I have two questions:
• Why has the company not purchased the full amount of 80,000 shares in each of the past three years?
• Is the purchase of shares subject to the Normal Course Issuer Bid provisions of the Toronto Stock Exchange?

I have received a reply (emphasis from original):

In response to your first question, the Corporation is not subject to a best efforts obligation to purchase 80,000 per annum of the First Preferred Shares, 1986 Series. The Corporation has fulfilled its obligation to make all reasonable efforts to purchase the specified number of shares at a price not exceeding $50,00, if and to the extent that such shares were available for purchase.

In response to your second query, the purchase of these shares, while being completed through Toronto Stock Exchange facilities, is not subject to Normal Course Issuer Bid provisions.

Well, mea culpa on the “reasonable” vs. “best” efforts question, but I’m still confused. I have examined the HIMIPref™ database and created the following histogram of the offer prices:

Click for Big

So: the offer price never exceeded $50.00, not even once, on any trading day in the three calendar years of interest (on six occasions, the offer was exactly $50.00). So it’s time to write another letter and try to nail down the meaning of the word “reasonable”.

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