DC.PR.C Will Be Extended

Dundee Corporation has announced:

that holders of First Preference Shares, Series 4 (the “Series 4 Preferred Shares”) earlier today approved the previously announced plan of arrangement (the “Arrangement”) of the Company pursuant to which each Series 4 Preferred Share will be exchanged for: (i) 0.7136 of a First Preference Share, Series 5 of the Company; and (i) 0.25 of a Class A subordinate voting share purchase warrant.

The Arrangement was approved at the special meeting, with 3,056,887 Series 4 Preferred Shares, representing 93.22% of the total votes cast at the meeting, voting in favour of the Arrangement and 222,393 Series 4 Preferred Shares, representing 6.78% of the total votes cast at the meeting, voting against it.

The Company intends to apply for the final order of the Ontario Superior Court of Justice (Commercial List) to approve the Arrangement on February 10, 2016. Assuming that court approval is obtained, the Arrangement is expected to be completed on or about February 12, 2016.

Dundee made an initial proposal in November that attracted some press coverage and an exhortation to consider exercising dissent rights. This led to reconsideration by Dundee despite a rather peculiar endorsement from a proxy advisor and led to a sweeter offer that attracted further commentary.

I would dearly love to know how much of a role the exorbitant proxy solicitation fees played. How many votes were actually cast by informed shareholders, vs. how many by mis-informed or under-informed holders pressured by their fee-hungry advisors … and how many were cast simply by the advisors themselves?

Anyway, I have set up a new security for this issue on HIMIPref™, which reflects the new dividend rate and new call schedule, but the old par value – since the issue will trade based on $17.84 par until the change is approved by the court and the new Series 5 shares start trading on the Exchange.

Vital statistics are:

DC.PR.C Operating Retractible YTW SCENARIO
Maturity Type : Option Certainty
Maturity Date : 2019-06-30
Maturity Price : 17.84
Evaluated at bid price : 15.95
Bid-YTW : 11.66 %

I had previously estimated that a coupon of 13% would be required in order for the issue to trade at around par, which was later revised to 11%-12%. So far it looks like I was about right.

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