Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?

[sculpin]

Globe says insiders buying at Dundee Corp.

2020-08-10 08:51 ET - In the News
Shares issued 99,977,865
DC.A Close 2020-08-07 C$ 1.42

Also In the News (C:DPM) Dundee Precious Metals Inc
The Globe and Mail reports in its Saturday, Aug. 8, edition that on May 13, Dundee Corp. ($1.42) raised $151.8-million in gross proceeds via the sale of 23.9 million Dundee Precious Metals ($9.80) shares. The Globe's guest columnist Ted Dixon writes in the Who Is Buying and Selling column that Dundee is sitting on a cash pile available to support what chief executive officer Jonathan Goodman has said is the firm's strategic focus on the junior mining sector. Mr. Goodman and Dundee Corp. director Murray Sinclair are literally buying into the junior mining pivot. Since May 19, Mr. Goodman has spent $2-million buying Dundee Corp. shares at an average price of $1.23.

[SharperDingaan]

GMP vs DPM pretty much tells you everything.

SD
 

[SafetyinNumbers]

That was quite the head fake from GMP on the dividends. Now bid up on the original thesis that the credit spreads are two wide and significantly more equity will be issued to take in RGMP.

If anyone is looking for another pref to get into, I think the GMP.PR.B is interesting. It resets at 289bp over and yields 9.7% at the current payout but that will drop to 8.7% in April 2021, if the 5 yr yield stays down here. Can also choose to convert to floater (GMP.PR.C) if one thinks inflation may come sooner rather than later.

I think it's just mispriced because no one has taken a look since they sold their investment bank to Stifel. Now it's just a bag of cash with a clearing business that breaks even and a one third stake in Richardson GMP, which is an independent wealth manager that should have less volatile earnings stream than the old investment bank. Also, they are supposed to buy the rest of the Richardson GMP business for stock. That will triple the equity backing the preferred so it seems like the credit will just get better.

If I were them I would do an SIB on the preferred like Dundee did but I'm sure they think of the preferred as cheap capital.

GMP just suspended their preferred dividend for what looks like a technical reason / incompetence but I don’t know for sure. Essentially, they need to have a shareholder meeting to reduce the stated capital and from what I can tell they haven’t had their 2019 AGM yet so it should be by year end.

Anyway, another bad idea in a string of bad ideas from me. Apologies.

Most likely only a bad idea in the short term. If one can use price weakness to add to the GMP prefs at lower levels on this news, when the dividend is restored later this year, will turn out to be an even better idea.

I didn’t expect holders to react rationally.

[deleuze68]

Dundee increased their offer for the Series 2 Prefs to $19.50, a fixed price, plus will take up as many shares as are tendered, so no prorationing. As an added bonus they will also pay a prorated dividend of 26 cents. So $19.76 with an expecting closing of September 10th. Trading at 19.30 now, so an annualized return of around 40%. Not too shabby.

[doc75]

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.pdf


There'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.

------------------------

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.”

[petec]

Very odd.

They should have included a put right.

[doc75]

The discounted warrants brought in $60m cash. Approximately 1/3 of warrants remain outstanding.  They now have $140m cash at corporate, pretty much exactly the market cap at today's price.   

----------------------------

TORONTO, Oct. 28, 2020 (GLOBE NEWSWIRE) -- Dundee Corporation (TSX: DC.A) (“Dundee” or the “Company”) is pleased to announce the successful completion of its early warrant exercise program, as described in the press release dated October 20, 2020. A total of 7,819,900 unlisted warrants (“Warrants”) to acquire shares of Dundee Precious Metals Inc. (“Dundee Precious”) have been exercised to-date, of which 7,452,400 Warrants were exercised at the discounted exercise price of $7.60, providing aggregate proceeds of $59,578,240 to Dundee. A total of 4,130,100 Warrants remain issued and outstanding.

With these proceeds from the early warrant exercise program, the Company currently has approximately $140 million in cash at the corporate level. It is anticipated that the Company will not have taxes payable in connection with the proceeds of exercised Warrants.

“The receipt of these funds improves our financial position, strengthens our balance sheet and enhances our strategic flexibility,” said Jonathan Goodman, President and CEO.

“With today’s economic, geopolitical and market uncertainty including the ongoing effects of the COVID – 19 pandemic, our management team and board of directors support this prudent step,” said Bob Sellars, Executive Vice President and Chief Financial Officer.

The remaining outstanding Warrants may be exercised prior to expiration on May 13, 2021, 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”).

[brisbane]

The discounted warrants brought in $60m cash. Approximately 1/3 of warrants remain outstanding.  They now have $140m cash at corporate, pretty much exactly the market cap at today's price.   

What's your point?

[doc75]

The discounted warrants brought in $60m cash. Approximately 1/3 of warrants remain outstanding.  They now have $140m cash at corporate, pretty much exactly the market cap at today's price.   

What's your point?

Just reporting the facts, ma'am. 

There is some possibility that an SIB for the common is in the works, so the relative sizes of the cash pile and market cap is of interest.

[brisbane]

The discounted warrants brought in $60m cash. Approximately 1/3 of warrants remain outstanding.  They now have $140m cash at corporate, pretty much exactly the market cap at today's price.   

What's your point?

Just reporting the facts, ma'am. 

There is some possibility that an SIB for the common is in the works, so the relative sizes of the cash pile and market cap is of interest.

That might have some relevance if the company had no debt or prefs, and didn’t burn cash. But...