Unfair deal for Pref holders - VOTE AGAINST I noticed in the press release today that they intend to redeem our preferred shares at $22 as part of the privatisation of ATP.
I would like to express my complete disagreement with the $22 consideration offered and will be voting against the transaction. I also will not hesitate to exercise my dissent rights as the fair and just consideration for all classes of preferred shares is $25 - full stop.
My comments are as follows:
- In the capital structure of a company, debt ranks first, preferred shares second and equity third. As such with preferred shares having been issued at $25 (par) they legally are redeemable and repayable at par of $25 before common equity holders are paid. In this instance you are looking to redeem at a 12% discount to par all the while providing equity holders with a 48% premium. The valuation of ATP for the purchaser was done on an Enterprise Value (EV) basis. As such the Board had a fiduciary today to allocate the sale price in the order above to first make debt holders whole, second to make preferred holders whole and lastly allocate any additional proceeds to equity holders. Not doing so violates the clear hierarchy in the capital structure.
- If you review precedent transactions where there were privatizations with outstanding preferred share classes, preferred holders of Rona were offered $24 and the preferred holders of Gaz Metro/Energir were offered $25. Your $22 is significantly below precedents and completely unjustified. If you want to delist these preferred shares you need to pay $25.
- You have a right to redeem the rate reset preferred series B on 12-31-2024 at $25. With that in mind why is that in my personal interest for you to redeem it now at $22? If you want to redeem it now or in 2024 the price is $25. Why would you look to lower the clearly laid out price in the prospectus?
- You have a right to redeem the rate reset preferred series A on 2-16-2021 at $25. With that in mind why is that in my personal interest for you to redeem it now at $22? If you want to redeem it now or on 2-16-2021 the price is $25. Why would you look to lower the clearly laid out price in the prospectus?
- Finally the Management and Board are conflicted as they are significant holders of common shares and not of preferred shares. Therefore it is in their interest to have a higher takeout price on the common shares and not on the preferred shares.
I would encourage all PREFERRED HOLDERS to VOTE AGAINST the $22 offer. It should be $25.