It can be a record for a takeover: the costs of closing the offer – defined within the circular as the per share estimated transaction cost – add up to about 25 per cent of what shareholders will receive.
But this is the state of affairs at Opta Minerals, that is set to become released of their misery at month-end when its shareholders gather to vote on an offer from Speyside Equity Fund.
And while the vote is really a mandatory part of the process, it’s not going to have an effect on the end result given that SunOpta, the major shareholder and former 100 per cent owner, has agreed to vote its 65.8 per cent block to aid the transaction. SunOpta is deemed to be area of the minority.
While shareholders will receive a net $0.52 a share, how a deal continues to be structured, the offer may very well be cash payment of “$0.6933 per Opta share minus the per share estimated transaction cost” of $0.1731. Those transaction costs include meeting expenses, the costs of the fairness opinion along with other advisory fees (thought as US$1 million), costs of D&O insurance plus change of control payments ($866,000 in all) to 5 management staff.
“It’s exorbitant and I’ve never witnessed shareholders having to pay for such costs out of their proceeds. We’ve already voted our 584,538 shares from the amalgamation. We own 3.2 percent and can likely be exercising our right of dissent,” noted Stephen Takacsy, chief investment officer at Montreal-based Lester Asset Management.
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Takacsy, who bought the shares in mid-2014 following the announcement of a strategic review and reckons the cost on offer is too low, has filed complaints with the OSC and TSX requesting they look into the transaction. “We have requested SunOpta to be excluded in the meaning of a minority shareholder.”
The transaction also demonstrates that careful judgment and luck are needed when a minority shareholder buys into a company which has a major shareholder whose affection for, and interest in, the company waxes and wanes over time. Opta Minerals was spun from SunOpta in February 2005 once the new issuer raised $19.8 million via the sale of $4 units.
The three acquisitions Opta Minerals made over the period 2011 to 2012 saddled the organization with $34 million of debt – all part of a plan to expand the business. In hindsight it might happen to be better with a mixture of equity and debt. Those acquisitions came after Opta Minerals, “following discussions with SunOpta,” launched then abandoned a strategic review.
In the circular, we’re told that “for yesteryear many years,” SunOpta has sought to divest non-core assets, “including its stake in Opta Minerals.” At the begining of 2014, SunOpta restated that objective. The price which will accepted under those circumstances is most likely not the same as what’s going to be authorized when profit maximization may be the objective. But SunOpta’s decision to simply accept the $0.35 per share cash and the $0.17 note option rather than cash C probably helped the buyer in putting the offer to shareholders.
On Tuesday SunOpta, said, “it didn’t have further comment apart from its press release.”
And the organization – and its adviser – looked far and wide following the strategic review launched in mid-2014: 148 parties were contacted; 11 attended management presentation; three submitted proposals but none resulted in a definitive offer. Last Spring, Speyside Equity was contacted along with a deal eventually struck.
Financial Post
bcritchley@nationalpost.com
