Unexpected news (see below).
Dundee should have over $100m cash even after the pref B buyout. The DPM warrants have a strike of $8 and expire in May 2021. DPM is currently trading just shy of $10 and has held over $8.50 since July. So why the rush to lower the strike to $7.60? I would've thought many warrant holders already exercised and cashed-out when DPM broke $10, but I guess not.
- de-risking due to political uncertainty viz. US election? price of gold impact?
- tax impacts?
- extra capital to launch a SIB for the remaining B prefs / D prefs / common?
The recent AGM presentation does mention return of excess capital via SIB/NCIB/Dividend "when appropriate":
http://dundeecorp.com/pdf/DC%202020%20AGM%20presentation%20FINAL.pdfThere's roughly $80m in preferred remaining ($30m B and $50m D) and the market cap is around $140m. They'll have at least $120m in cash by end of October. It'll be interesting to see what they do. Maybe they just want maximum flexibility into end-of-year, given the potential for market shocks.
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Dundee Corporation Announces Temporary Discount Exercise Price for Its Warrants Issued to Purchase Shares of Dundee Precious Metals Inc.
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE PUBLICATION, DISTRIBUTION OR DISSEMINATION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES.
TORONTO, Oct. 20, 2020 (GLOBE NEWSWIRE) -- Dundee Corporation (TSX: DC.A) (“Dundee”) announces notice to holders of the warrants (“Warrants”) to acquire shares of Dundee Precious Metals Inc. (“Dundee Precious”) issued in connection with the secondary sale of shares of Dundee Precious on May 13 th , 2020, an opportunity to exercise their Warrants at the discount exercise price of $7.60 during the period specified below.
Any warrant holder may elect to exercise their Warrants at the discounted exercise price of $7.60 during the period commencing on October 20, 2020 and ending at the prescribed time on October 27, 2020 (the “Discounted Exercise Expiry Time”). Warrants exercised after the Discounted Exercise Expiry Time and prior to expiration on May 13, 2021 may be exercised at the original exercise price of $8.00, subject to adjustment in accordance with the provisions of the warrant indenture between Dundee Resources Limited, a wholly owned subsidiary of Dundee and Computershare Trust Company of Canada, dated May 13, 2020, as amended by the First Amending Agreement dated October 20, 2020 (the “Warrant Indenture”).
Support F rom Existing Holders
Dundee has secured the commitment of institutional investors, holding approximately 25% of the currently issued and outstanding Warrants to exercise their Warrants on or prior to the Discounted Exercise Expiry Time at the discounted exercise price of $7.60 for total consideration of approximately $22.4 million.
Exercise Details & Benefits
In accordance with the terms of the Warrant Indenture, Dundee has provided the registered holder of warrants with notice of the discount exercise price. Dundee’s Board of Directors has approved the discount exercise price applicable to the warrants during the period outlined above.
Dundee intends to issue a press release on October 28, 2020 confirming the total consideration received for warrants exercised during the early exercise period.
“Our offer to accelerate the exercise of the Dundee Precious warrants provides us with an opportunity to improve our financial position, strengthen our balance sheet and enhance our strategic flexibility in a timely manner,” said Jonathan Goodman, President and CEO. “In today’s environment of continued macroeconomic and geopolitical uncertainty, which is exacerbated by the ongoing COVID-19 pandemic, our management team and board of directors believe this is a prudent measure to take at this time.”