Toronto-based asset-management firms Aston Hill Financial Inc. and Front Street Capital 2004 are changing the terms of their proposed merger and pushing back meetings to approve the deal by a week.
The firms announced on Thursday that they are amending the terms of the deal, following consultations with holders of Aston Hill’s convertible unsecured subordinated debentures. Aston Hill is proposing several key changes to the terms of its debentures, including increasing the number of common shares that will be exchanged for debentures; reducing their conversion price to 30¢ a share from 65¢ a share; and extending their maturity date to June 30, 2021 from Jan. 31, 2019.
To compensate the Front Street partners for the additional dilution that would result from the changes to the terms of the debentures, the Front Street partners will receive an additional 10 million common shares in the combined company. As a result, the current Front Street partners will own approximately 45.9% of the combined company and the current Aston Hill shareholders will own approximately 36.4%.
Due to the proposed changes to the terms, the debenture holders are now being asked to approve the new maturity date, the new conversion price, a reduction in the aggregate principal amount of the debentures and an increase to the interest rate on the debentures to 7% from 6.50%, along with the change in the interest payment dates.
In addition, the firms are also pushing back a planned meeting for shareholders and debenture-holders to Nov. 22 from Nov. 15. The firms note that investors holding 20.1% of the outstanding debentures have entered into support agreements in favour of the changes; 33% of shareholders have also agreed to support the deal; and that Aston Hill’s board of directors supports the new terms. The deal is expected to close in late November.
Shareholders or debentureholders that have already voted and want to change their vote will need to revoke their previous vote and submit a new proxy or voting instruction form.
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