The Plan Revealed and How Fairfax was the Spoiler How Fairfax Ruined the Plan
What if Honderich’s plan for the past decade was to take Torstar private on the cheap? How might you achieve that goal in a manner that doesn’t attract a lot of attention and the Voting Trust falls nearly into line behind the plan?
Here’s how you do it and how it all goes off the rails:
1). Years ago Honderich convinces the Voting Trust members that if you slowly and consistently drive down the share price by reducing the dividend, installing a CEO and a CFO with limited skills and no relevant experience, populate the board with members not astute enough to connect the dots and crush the expectations of shareholders each and every quarter for years that you can scoop up the company and privatize it all financed at the cost of what you are currently paying in dividends.
2). Once shareholders are sufficiently beaten down the Voting Trust magnanimously offers to pay a “generous” $3.00 a share representing a cost of less than $200 million to privatize Torstar. Shareholders wouldn’t have been happy under this scenario, but with the shares consistently hovering around $1.00 they would have taken the offer and chalked it up as simply a bad investment. Besides who really cares about the B shareholders anyways?
3). The Voting Trust if successful might have made a bigger mess upon taking it private, but this plan was never really about the money. This was fundamentally all about ego and legacy.
4). Unexpectedly, along comes Fairfax, and while they had no idea about the underhanded Honderich privatization scheme, they saw the unrealized potential of Torstar. Watsa could see the significant underlying value of Torstar when integrated with parts of Postmedia and managed properly. Honderich and his gang had not factored in a determined and resourceful foil to their clever plans. They counted on being able to dupe the great unwashed masses.
5). Fairfax makes a fair offer well above $3.00 late last year which catches the Voting Trust flat footed. They buy themselves some time with a standstill agreement in return for Fairfax not disclosing their offer and buying more shares in the market. Buying the Power Corp and Canso shares must have been a significant date in the agreement. How much more time they bought is anyone’s guess. With Fairfax now owning almost 41% of the B shares it may signal time is quickly running out on the Voting Trust’s plans to privatize the company through the stealth oppression strategy they’ve employed over the past decade.
6). Look forward to things heating up in the coming months as the realization sets in for the Voting Trust members. Their oppression strategy is going to be revealed for what it always was - a sad scheme to acquire Torstar for a fraction of its value to satisfy the egos of this gang of entitled heirs and incompetents.