Dundee Corporation (TSX: DC.A, DC.PR.B and
DC.PR.D) (“
Dundee” or the
“
Corporation”) announced today that it intends to
commence a substantial issuer bid (the “
Offer”) to
purchase for cancellation from the holders thereof who choose to
participate up to 975,610 of its Cumulative Floating Rate First
Preference Shares, Series 3 in the capital of the Corporation (the
“
Series 3 Shares”) at a purchase price of C$20.50
(the “
Purchase Price”) per Series 3 Share, for a
maximum aggregate purchase price of C$20,000,005.
In connection with the Offer, the Corporation
has entered into lock-up agreements (the “Lock-up
Agreements”) with each of Stornoway Recovery Fund LP and
Ravensource Fund (the “Locked-up Shareholders”)
pursuant to which, among other things, and subject to the terms and
conditions set out therein, the Locked-up Shareholders have agreed
to tender to the Offer all of the Series 3 Shares held by them as
at the date of the Lock-up Agreements. As at the date of the
Lock-up Agreements, the Locked-up Shareholders hold an aggregate of
499,650 Series 3 Shares representing approximately 30.48% of the
issued and outstanding Series 3 Shares as at November 20, 2023.
The Offer is expected to commence on November
22, 2023 and will expire at 11:59 p.m. (Toronto time) on December
27, 2023 or such later time and date to which the Offer may be
extended by Dundee, unless varied or withdrawn by Dundee.
“This Offer is another important step towards
the ongoing streamlining of our capital structure to support the
successful execution of our strategic business plan with a focus on
capital allocation in the junior mining industry. Reducing the call
on our capital from the preferred share dividends preserves our
capital base to pursue our core strategy,” said Jonathan Goodman,
President and Chief Executive Officer.
“We believe this is an effective way to simplify
our balance sheet, lower our overall cost of capital, and reduce
our run-rate cash outflows which benefits all classes of
shareholders,” said Lila Murphy, Executive Vice President and Chief
Financial Officer.
The Board of Directors will continue to review
various options for the allocation of capital, including any
portion of the C$20,000,005 under the Offer remaining in excess of
the aggregate purchase price payable pursuant to the Offer, with
such options including, but not limited to, further repurchases of
the Corporation’s securities, including without limitation, its
Class A Subordinate Voting Shares and Series 2 Shares (as defined
below). Beginning in early 2018, the Corporation has focused on the
implementation of its strategy of rationalizing its portfolio of
investments and monetizing non-core assets as it exists business
lines which are no longer deemed to be aligned with its longer-term
mining-focused strategy. As part of this process, the Corporation
has taken significant steps to streamline its capital structure and
strengthen its balance sheet. In line with the Corporation’s
longer-term strategy and commitment to creating value for the
Corporation, the Board of Directors believes that the purchase of
Series 3 Shares under the Offer represents an attractive investment
opportunity for Dundee and will be welcomed by certain holders of
Series 3 Shares who may wish to reduce their share ownership
positions.
Treatment of Declared
Dividend
The Corporation previously announced on November
8, 2023, that the Board of Directors approved the payment of a
quarterly cash dividend for the quarter ended December 31, 2023 of
C$0.58351 per Series 3 Share, which is payable on January 2, 2024
to shareholders of record on December 19, 2023 (the “Series
3 Dividend Record Date”). Shareholders of record on the
Series 3 Dividend Record Date will be entitled to receive the
quarterly cash dividend declared by the Board of Directors for each
Series 3 Share held on the Series 3 Dividend Record Date, whether
or not such shareholders decide to deposit their Series 3 Shares
under the Offer and whether or not all or any portion of their
Series 3 Shares are taken up and paid for by the Corporation
pursuant to the Offer, and whether or not such shareholders
continue to hold some or all of such Series 3 Shares following the
Series 3 Dividend Record Date. Such quarterly cash dividend will be
paid by the Corporation on January 2, 2024 to shareholders of
record on the Series 3 Dividend Record Date (less any tax required
to be deducted or withheld by the Corporation) in accordance with
the restated articles of the Corporation. Any shareholder who
acquires Series 3 Shares after the Series 3 Dividend Record Date
will not, in respect of such Series 3 Shares acquired by them after
the Series 3 Dividend Record Date, under any circumstances be
entitled to receive from the Corporation the quarterly cash
dividend declared by the Board of Directors for the quarter ended
December 31, 2023, nor will such shareholder be entitled to receive
any pro-rata portion of such quarterly cash dividend, irrespective
of whether or not such shareholder decides to deposit such Series 3
Shares under the Offer and whether or not all or any portion of
such Series 3 Shares are taken up and paid for by the Corporation
pursuant to the Offer. The terms of the Offer reflect and take into
account that the quarterly cash dividend for the quarter ended
December 31, 2023 of C$0.58351 per Series 3 Share will be paid by
the Corporation to shareholders of record on the Series 3 Dividend
Record Date on January 2, 2024 (less any tax required to be
deducted or withheld by the Corporation) in accordance with the
restated articles of the Corporation. Holders of record of
Cumulative 5-Year Rate Reset First Preference Shares, Series 2 (the
“Series 2 Shares”) on the dividend record date for
the quarterly cash dividend declared by the Board of Directors on
such Series 2 Shares for the quarter ended December 31, 2023 will
be entitled to receive such quarterly cash dividend, with such
quarterly cash dividend to be paid by the Corporation on January 2,
2024 (less any tax required to be deducted or withheld by the
Corporation) in accordance with the restated articles of the
Corporation. In accordance with the restated articles of the
Corporation, the Corporation has set aside for payment out of cash
on hand sufficient funds to satisfy all declared and unpaid
dividends on outstanding Series 3 Shares and outstanding Series 2
Shares.
Additional Details of the
Offer
The Corporation expects to fund any purchases of
Series 3 Shares under the Offer using first the funds advanced
under the Loan (as defined below) and then as necessary using the
Corporation’s available cash on hand, and expects to fund any fees
and expenses related to the Offer using the Corporation’s available
cash on hand. All Series 3 Shares purchased by the Corporation
under the Offer will be cancelled in due course.
If 975,610 or fewer Series 3 Shares are validly
deposited on or before the expiry time of the Offer (and not
properly withdrawn), then Dundee will, upon the terms and subject
to the conditions of the Offer, purchase at the Purchase Price all
such Series 3 Shares deposited. If more than 975,610 Series 3
Shares are validly deposited on or before the expiry time of the
Offer (and not properly withdrawn), then upon the terms and subject
to the conditions of the Offer, the Corporation will purchase the
Series 3 Shares on a pro rata basis after giving effect to “odd
lot” tenders (of holders beneficially owning fewer than 100 Series
3 Shares), which will not be subject to pro-ration. Series 3 Shares
that are not purchased will be returned to shareholders.
The Offer and all deposits of Series 3 Shares
are subject to the terms and conditions set forth in the offer to
purchase, the accompanying issuer bid circular and the related
letter of transmittal and notice of guaranteed delivery (all such
documents, as amended or supplemented from time to time,
collectively constitute and are herein referred to as, the
“Offer Documents”). Further details of the Offer,
including the terms and conditions thereof and instructions for
tendering Series 3 Shares, will be included in the Offer Documents.
The Offer Documents will be mailed to holders of Series 3 Shares,
filed with the applicable Canadian securities regulatory
authorities and made available without charge on SEDAR+ at
www.sedarplus.ca in accordance with applicable securities laws, as
well as being posted on the Corporation’s website at
www.dundeecorporation.com, on November 22, 2023.
As of November 20, 2023, the Corporation had
1,639,022 Series 3 Shares issued and outstanding. The Series 3
Shares are listed and posted for trading on the Toronto Stock
Exchange (the “TSX”) under the symbol “DC.PR.D”.
On November 17, 2023, the last full trading day prior to the day
the terms of the Offer were publicly announced, the closing price
of the Series 3 Shares on the TSX was C$20.20.
The Offer will not be conditional upon any
minimum number of Series 3 Shares being deposited. However, the
Offer will be subject to certain conditions that are customary for
transactions of this nature and as will be set out in more detail
in the Offer Documents.
Dundee previously received approval from the TSX
for normal course issuer bids (“NCIBs”) for its
Series 2 Shares and Series 3 Shares through the facilities of the
TSX from April 12, 2023 to April 11, 2024. The Corporation has
suspended share repurchases under its NCIBs and the NCIBs will
remain suspended until at least the day following the expiration of
the Offer or the termination of the Offer.
Dundee has appointed Computershare Investor
Services Inc. (the “Depositary”) to act as
depositary for the Offer. Any questions or requests for information
or assistance regarding the Offer may be directed to the Depositary
at the contact details set out in the Offer Documents.
Additional Details of the
Loan
In connection with the Offer, the Corporation
has entered into a loan agreement dated November 17, 2023 (the
“Loan Agreement”) among the Corporation, as
borrower, Dundee Resources Limited, as guarantor, and Earlston
Investments Corp., as lender. The loan, to be advanced by the
lender, will be in a principal amount of up to C$20,000,000 and
will be available to the Corporation upon satisfaction of certain
customary conditions precedent (the “Loan”). The
Loan will be guaranteed by Dundee Resources Limited and secured by
a security interest over all present and after-acquired personal
property of the Corporation and Dundee Resources Limited, including
a pledge of the shares of Reunion Gold Corporation held by Dundee
Resources Limited (such shares of Reunion Gold Corporation, the
“Collateral”). The Loan Agreement provides that
the Corporation shall use the proceeds of the Loan to repurchase
all or any portion of the Series 3 Shares pursuant to the Offer,
and for no other purpose, except with the prior written consent of
the lender. Interest on the Loan will accrue: (i) at a rate equal
to the greater of (a) The Toronto-Dominion Bank prime rate plus
1.95% per annum, and (b) 9.15% per annum, during the first 24
months of the Loan; and (ii) thereafter, at a rate equal to The
Toronto-Dominion Bank prime rate plus 6.50% per annum. The Loan
will be repayable on February 27, 2026. At any time after June 28,
2024, the Corporation may voluntarily prepay all or any portion of
the Loan together with all interest accrued thereon without premium
or penalty. The Corporation must repay (i) any portion of the Loan
not used to fund the purchase of Series 3 Shares under the Offer,
(ii) periodically, if the value of the Collateral is not at least
250% of the outstanding principal amount of the Loan plus overdue
interest (if any), such amount as required to ensure the value of
the Collateral is at least 250% of the outstanding principal amount
of the Loan plus overdue interest (if any), and (iii) if Dundee
Resources Limited sells any of the Collateral in certain
circumstances as set out in the Loan Agreement, an amount equal to
the net proceeds of such sale.
This news release is for informational
purposes only and does not constitute an offer to buy or the
solicitation of an offer to sell any Series 3 Shares. The
solicitation and the offer to buy Series 3 Shares will only be made
pursuant to the Offer Documents filed with the Canadian securities
regulatory authorities. The Offer will not be made to, nor will
deposits be accepted from or on behalf of, shareholders in any
jurisdiction in which the making or acceptance of the Offer would
not be in compliance with the laws of any such jurisdiction.
However, Dundee may, in its sole discretion, take such action as it
may deem necessary to make the Offer in any such jurisdiction and
to extend the Offer to shareholders in any such
jurisdiction.
The Board of Directors has authorized
and approved the Offer. However, none of Dundee, the Board of
Directors or the Depositary makes any recommendation to any
shareholder as to whether to deposit or refrain from depositing any
or all of such shareholder’s Series 3 Shares pursuant to the Offer.
Shareholders are strongly urged to carefully review and evaluate
all information provided in the Offer Documents, to consult with
their own financial, legal, investment, tax and other professional
advisors and to make their own decisions as to whether to deposit
Series 3 Shares under the Offer and, if so, how many Series 3
Shares to deposit.
ABOUT DUNDEE CORPORATION
Dundee Corporation is a public Canadian
independent holding company, listed on the Toronto Stock Exchange
under the symbol “DC.A”. Through its operating subsidiaries, Dundee
Corporation is an active investor focused on delivering
long-term, sustainable value as a trusted partner in the mining
sector with more than 30 years of experience making accretive
mining investments.
FOR FURTHER INFORMATION PLEASE
CONTACT:
Investor and Media RelationsT: (416) 864-3584E:
ir@dundeecorporation.com
Forward-Looking Statements
Forward-looking statements are included in this
news release. These forward-looking statements are identified by
the use of terms such as “anticipate”, “believe”, “could”,
“estimate”, “expect”, “intend”, “may”, “plan”, “predict”,
“project”, “will”, “would”, and “should” and similar terms and
phrases, including references to assumptions. Such statements may
involve but are not limited to, Dundee’s plans, objectives,
expectations and intentions, including Dundee’s objectives and
expectations regarding the Offer and the size, timing and terms and
conditions of the Offer, the Lock-up Agreements, the effect the
Offer will have on the Corporation on a go-forward basis, the
potential future allocation of the Corporation’s capital, the Loan
and the availability of funds under the Loan to satisfy the payment
obligations under the Offer, and other comments with respect to
strategies, expectations, planned operations or future actions.
Forward-looking statements, by their nature, are based on
assumptions and are subject to important risks and uncertainties.
Any forecasts, predictions or forward-looking statements cannot be
relied upon due to, among other things, changing external events
and general uncertainties of the business and its corporate
structure. Results indicated in forward-looking statements may
differ materially from actual results for a number of reasons. The
forward-looking statements contained herein are subject to change.
However, Dundee disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new
information, future events or otherwise, except as required under
applicable securities regulations.
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