DC.PR.E To Be Converted By Issuer

Dundee Corporation has announced:

it has provided notice in accordance with the provisions of the articles of amendment of the Corporation dated February 8, 2016 (the “Articles of Amendment”) that effective May 15, 2019 (the “Conversion Date”) it intends to convert all of the outstanding first preference shares, series 5 (the “Series 5 Shares”) of the Corporation into fully paid, non-assessable and freely tradable class A subordinate voting shares (the “Subordinate Voting Shares”) of the Corporation.

“We believe our decision to convert the Series 5 Shares into class A subordinate voting shares is prudent and aligned with the best interests of the Corporation and its stakeholders,” said Jonathan Goodman, Executive Chairman of the Corporation. “This conversion allows us to maintain financial flexibility and balance sheet strength to support our longer-term strategic objectives.”

The number of Subordinate Voting Shares into which the Series 5 Shares of each registered holder will be converted will be equal to the product of:

(a) the number obtained when:

i. $25.48, being the applicable redemption price of $25.25 per Series 5 Share on the Conversion Date, plus an amount equal to all accrued and unpaid dividends per Series 5 Share up to but excluding the date fixed for conversion (less any tax required to be deducted and withheld by the Corporation),

is divided by

ii. the greater of: (A) $2.00, and (B) 95% of the weighted average trading price of the Subordinate Voting Shares on the TSX for the 20 consecutive trading days ending on the fourth day prior to the Conversion Date, or, if such fourth day is not a trading day, the immediately preceding trading day (the greater of such amounts being, the “Weighted Price”),

with the result of the calculation being rounded upward to the nearest 1/100 of a Subordinate Voting Share; and

(b) the number of Series 5 Shares of the registered holder being converted.

The Company expects to issue approximately 42 million Subordinate Voting Shares in connection with the conversion of the 3,294,938 outstanding Series 5 shares.

Where a fraction of a Subordinate Voting Share would otherwise be issuable on conversion of Series 5 Shares, the Corporation will adjust such fractional interest by payment by cheque in an amount equal to the then market price of such fractional interest computed on the basis of the Weighted Price, as determined in respect of the Conversion Date.

From and after the Conversion Date, the registered holders of Series 5 Shares so converted will cease to be entitled to dividends on such Series 5 Shares or to exercise any of the rights of holders of Series 5 Shares in respect of such shares except the right to receive therefor the whole number of Subordinate Voting Shares to which they are entitled and payment with respect to a fraction of a Subordinate Voting Share as contemplated in the Articles of Amendment, and the registered holder thereof will become a registered holder of Subordinate Voting Shares of record, effective on the Conversion Date.


The Company also announced that in connection with the conversion of the Series 5 Shares, it is considering the implementation of a normal course issuer bid or a substantial issuer bid in respect of its Subordinate Voting Shares, which would commence, subject to board of director and regulatory approvals, following the Conversion Date.

This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell Subordinate Voting Shares. Any solicitation to sell or offer to buy Subordinate Voting Shares will only be made in accordance with applicable securities laws and the rules of the Toronto Stock Exchange.

DC.PR.E came into existence by an exchange from DC.PR.C, after an initial proposal in November, 2015 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. 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! DC.PR.E commenced trading 2016-2-12.

Accellerating losses in 2018 led to shareholder pressure for a means to avoid a redemption of the issue for cash prior to the scheduled 2019-6-30 retraction date.

I note the sentence in the press release that the company “expects to issue approximately 42 million Subordinate Voting Shares in connection with the conversion of the 3,294,938 outstanding Series 5 shares.” I note that the company has 57,985,136 shares of DC.A outstanding … fortunately, however, the founding family controls the company through multiple voting shares, so this destruction of shareholder value won’t have as much adverse effect on them as might otherwise be the case.

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