RE:Was this sale done honestly and ethically?The change in distribution policy announcement was on Jan 16, 2019. It did strike me as the time as a bit odd as the record date for Q1 was May 31 when it is more typical for the record date to be near the end of the quarter to which it applies. The new release went on to say that subsequent quarters would not be quite so bad. From the news release in italics:
“Under the new quarterly distribution schedule, any future distributions declared by the Board would be for the three-month period ending on March 31, June 30, September 30 or December 31, as applicable. The distribution record date for each quarterly distribution period will be the last Business Day (as defined in the Trust indenture) of the second calendar month following the end of the applicable quarter, with the distribution payment date to be the 15th day of the month following the distribution record date (or if such day is not a Business Day, on the following Business Day).
In accordance with the new quarterly distribution schedule, the distribution record date and distribution payment date for the distribution of $0.209 per Unit for the first quarter of 2019 will be May 31, 2019 and June 17, 2019, respectively.
With the exception of the distribution for the first quarter of 2019, which was approved by the Board on January 14, 2019, the Board expects that any future quarterly distributions will normally be declared on or about the 15th day of the month immediately following the end of the applicable quarterly distribution period.”
This was a bit of a surprise as it represented a significant deferral in payment. The payment of distributions for Q1 under the old policy (three monthly payments) would be paid in full by approximately April 15. Under the new policy this would not happen until June 17. I inferred from this that CRIUS was attempting to improve cash. I was thankful that the distribution had mostly been maintained. But, this definitely introduced uncertainty… Was this just a last gasp at pretending everything was OK when the market was signaling possible troubles – yield way too high – usually means that a distribution cut may be under consideration.
I was surprised when I heard about the buyout offer. The steps taken by the BOD seemed like defensive actions to maintain the status quo. The suggestion that this step was taken to depress the price to facilitate the buyout seems preposterous to me. The only Member of the BOD (2017 Information Circular) who holds more trust units that I do is the CEO who had 1,170,000 at that time. I bought in a while ago and my average cost is above the current bid so I will still lose (capital gains perspective) when the current deal closes. I would like to know the average cost the CEO has for his units. I always understood that the BOD had a duty to get as much value as possible for the shareholders (unit holders in this case).
I took a look at the financials for 2017 annual report. At that time there was $248.65M in trust equity and 56.944M trust units outstanding, so the book values of the trust units is around $4.37/unit. So, the current offer is a significant premium above this. But, I am still disappointed with the offer.