DC.PR.E Listed After Exchange From DC.PR.C, No Trading

Dundee Corporation has announced:

the completion of its previously announced share exchange transaction pursuant to which each First Preference Shares, Series 4 of the Company was exchanged for: (i) 0.7136 of a First Preference Share, Series 5 of the Company (the “Series 5 Preferred Shares”); and (ii) 0.25 of a Class A subordinate voting share purchase warrant (the “Warrants”) pursuant to a plan of arrangement under section 182 of the Business Corporations Act (Ontario).

The Series 5 Preferred Shares and the Warrants are each listed on the Toronto Stock Exchange (the “TSX”) under the symbols “DC.PR.E” and “DC.WT”, respectively, and will commence trading on the TSX at the opening of the market today.

The closing quotation for DC.PR.E was 17.08-23.00, 10×1 … let’s hope the spread tightens a little in future!

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.

… and finally, the company announced a ringing endorsement from the shareholders … or perhaps it would be better to say “the shareholders’ advisors”, since the proxy solicitation fee was so high!

Well, I hope it works out for them! The closing price of DC.A today was 4.69 (against a conversion floor price of $2.00), they’re not making any money and it may be a long time before they see their longed-for:

recovery in the energy and resource sector

DC.PR.E will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

Vital Statistics are based on the rather silly 17.08 bid:

DC.PR.E Operating Retractible YTW SCENARIO
Maturity Type : Option Certainty
Maturity Date : 2019-06-30
Maturity Price : 25.00
Evaluated at bid price : 17.08
Bid-YTW : 21.81 %

Update, 2016-2-26: Dundee estimates warrant value:

Dundee Corporation (TSX:DC.A) (the “Company”) today announced that it has estimated the fair market value of the Class A subordinate voting share purchase warrants (the “Warrants”) issued recently in connection with the Company’s previously announced share exchange transaction, pursuant to which each First Preference Share, Series 4 of the Company was exchanged for (i) 0.7136 of a First Preference Share, Series 5 of the Company, and (ii) 0.25 of a Warrant. The estimated fair market value is C$1.0666 per whole Warrant. As a result, based on this estimated value, non-dissenting holders of the Series 4 preferred shares should not be deemed for Canadian income tax purposes to have received a dividend as a result of the exchange. This estimate is not binding upon the Canada Revenue Agency or other tax authorities.

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