The people have spoken and the people, in this case holders of Series 4 preferred shares issued by Dundee Corp. who responded negatively to an initial proposal, have emerged victorious.
But they only won because Dundee listened and changed a plan that seemed destined to be shot down at a meeting originally scheduled for Jan. 7. Put it down as a victory for shareholders and common sense, a victory reflected by the market’s reaction: the prefs shares closed at $16.60 Thursday, up 15 per cent on the news.
“We have consulted and we responded with what we think is a win-win solution,” said David Goodman, chief executive of Dundee.
But the outcome – offering better terms to the holders of the outstanding $107.04 million prefs – raises an obvious question. How out of touch were those involved with the original proposal that seemed, through consent payments, to consider the interests of the investment advisers more than the interests of the owners of the securities. Prior to launching its first proposal, Dundee said it had received “substantial support” from representatives of “significant” holders of the prefs.
Dundee’s new proposal – that will require the mailing of a new circular to the holders of the Series 4 pref shares – will be voted on at a Jan. 28 meeting. In essence, holders are being asked to exchange their Series 4 prefs for Series 5 prefs with more attractive terms. Indeed holders have reason to be pleased with what negotiations between Dundee and investors produced.