This was not a bad financing..it is good for the company getting over $7 a share. They could never have raised money at that price without the benefits for the investors.
it is also bought deal. So that means BMO has agreed to fill the whole placement at that price.
Likely, some current owners will end up being involved.
It's like, suppose you want to donate to your favourite charity. You buy 1 million dollars in shares, donate them, so the the recipient (church, homeless, etc) get the full value of 1 million dollars in shares.
The donor... they have so many right offs because it is flow through, and also a charitable donation... they can end up paying as little as $100 000 to give a million dollars to their charity.
It's win win win. For the company, for the investor(donor), and the charity.
I don't understand why people are annoyed that they raised money at $7.15
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Donation of Flow-Through Shares
Many Tax Alert readers probably have heard or read something about a plan to reduce dramatically the after-tax cost of donations by using flow-through shares.
The plan involves a donor wishing to make a sizeable donation first purchasing shares listed on an exchange that are "flow-through shares" as defined in subsection 66(15) of the Income Tax Act (the Act) pursuant to a subscription agreement with the corporate issuer. The donor immediately donates these shares to the desired charity, and the charity then immediately sells the donated shares to a pre-arranged third-party buyer. By proceeding in this way, the donor is able to deduct Canadian Exploration Expenses (CEE) renounced in respect of the flow-through shares, and claim investment tax credits and charitable tax credits or deductions. All of this, combined with the elimination of income tax on capital gains from gifts of public company shares, results in a significant reduction in the cost of an intended donation.
For example, the after-tax cost to an individual donor, resident in the Province of Ontario, making such a donation would be less than 21% of the cash received by the charity. The net after-tax cost of the cash paid by a corporate donor would be about 13%. Put another way, an individual donor wishing to gift $100,000 to a charity will have reduced the after-tax cost of that gift from approximately $53,600 to approximately $20,600. If provincial tax credits are available the cost may be reduced even further.