Dundee Wealth Management Inc. has received regulatory relief allowing it to enter service agreements with several Cartier Partners Financial Group Inc. executives as part of its takeover offer, without these agreements amounting to extra compensation for the executives.
Dundee sought, and received, relief from the prohibition against collateral benefits and from the identical consideration requirements concerning takeovers. The rules require prohibiting firms from making a take-over bid, or entering into any collateral agreement with any owner of securities of the target issuer that has the effect of providing greater value than that offered to other holders of the same class of securities; and, buyers are required to offer identical consideration to all holders of securities that are of the same class when a take-over bid is made.
The relief accommodates an agreement between the firms that provides for the assignment of shareholder loans and services agreements with several Cartier executives. The agreements have been entered into primarily for the purpose of assuring Dundee that the integration of Cartier will be as successful as possible, and not for the purpose of providing the executives with a collateral benefit, it notes.
It is also seeking to pay Cartier’s U.S. shareholders in cash to avoid having its securities go into broad distribution in the U.S., thereby saving the time and expense of complying with the reporting and registration requirements under U.S. securities laws.
The regulators ruled that the agreements “are being made for reasons other than to increase the value of the consideration to be paid to Cartier Capital or the executives for their CPFG shares under the offer, and may be entered into despite the prohibition on collateral benefits provided that any going private transaction completed by the offeror subsequent to the offer receives majority of the minority approval.”
Dundee granted relief for Cartier service agreements
Agreements meant to assure successful integration of Cartier
- By: James Langton
- January 5, 2004 October 31, 2019
- 17:15