Source: The Canadian Press

An investment company has made good on its threat to launch a lawsuit against Boralex Inc. over the power producer’s takeover bid for Boralex Power Income Fund.

O’Leary Funds Management said Tuesday it will sue Boralex Inc. (TSX:BLX), Boralex Power (TSX:BPT.UN) and a subsidiary to prevent Boralex from “illegally expropriating” the more than four million fund units it holds in the income fund.

O’Leary said it is asking the Quebec Superior Court to enforce the existing requirement that 90% of independent unitholders accept any takeover offer in order for it to be approved.

Boralex wants to reduce that number to two-thirds, including unitholders affiliated with the company.

Boralex currently owns 23.3% of the trust.

The lawsuit claims that the proposed amendment of the trust agreement will squeeze-out non-tendering unitholders and is “unreasonable, abusive, illegal and cannot be forced upon investors.”

O’Leary manages about 9.09% of Boralex Power’s units. It says the offer is inadequate and believes investors would be better served if they withdrew their tendered units.

Any investor can withdraw their tendered units at any time by filling out the appropriate forms.

Boralex’s offer allows unitholders the option of taking $5 per unit in cash or $5 per unit in convertible unsecured subordinated debentures at 6.75% interest. Previously, only debentures were being offered.

This means the maximum amount of cash payable is $90.6 million, while the maximum aggregate principal amount of convertible debentures will be $135.9 million.

Boralex has also extended its offer until Sept. 15. The company said unitholders representing about 56% of Boralex Power have tendered their units in favour of the offer, while another 9% have entered into lock-up agreements.

Shares in Boralex fell 38 cents or 4.87% to $7.42 in afternoon trading on the Toronto Stock Exchange, while units in Boralex Power gained one cent to $4.92.