RICHMOND HILL, Ontario, March 16, 2018 (GLOBE NEWSWIRE) — Lysander Funds Limited (“Lysander”) announced today that, following its February 1, 2018 announcement of its intention to restructure Canso Select Opportunities Fund (the “Fund”), it has filed on SEDAR a Notice of Special Meeting and Management Information Circular (the “Circular”) in respect of a special meeting (the “Special Meeting”) of holders of the Fund’s Class A and Class F units (the “Unitholders”) as of March 6, 2018 to be held on April 12, 2018 at 10:30 a.m. (Toronto time) in Toronto, Ontario. The Special Meeting has been called for the purpose of considering and voting on a proposed plan of arrangement involving the Fund, the Unitholders and Canso Select Opportunities Corporation (“NewCo”) under section 182 of the Business Corporations Act (Ontario) (the “Arrangement”). The Special Meeting is being held pursuant to an interim order of the Ontario Superior Court of Justice (Commercial List) (the “Court”) made on March 15, 2018 (the “Interim Order”). Details of the Arrangement, as well as a copy of the Interim Order, are set forth in the Circular.
Terms of the Arrangement
The Fund and NewCo have entered into an arrangement agreement related to the Arrangement (the “Arrangement Agreement”) providing for the completion of the Arrangement. Pursuant to the Arrangement, holders of Class A units of the Fund (“Class A Units”) will receive, for each Class A Unit held as of the close of business on the trading day immediately preceding the effective date of the Arrangement (the “Determination Time”), one Class A multiple voting share of NewCo (a “NewCo Class A MV Share”) and one Class B subordinate voting share of NewCo (a “NewCo Class B SV Share”), unless a Class A Election or Class B Election from the Class A Unitholder was received by CDS prior to 5:00 p.m. (Toronto time) on May 15, 2018 (the “Election Deadline”). Class A Unitholders that submit a Class A Election prior to the Election Deadline will receive two NewCo Class A MV Shares (and nil NewCo Class B SV Shares) for each Class A Unit transferred. Class A Unitholders that submit a Class B Election to CDS prior to the Election Deadline will receive two NewCo Class B SV Shares (and nil Newco Class A MV Shares) for each Class A Unit transferred.
Holders of Class F units of the Fund (“Class F Units”) will receive, for each Class F Unit held as of the Determination Time, that number of NewCo Class A MV Shares and NewCo Class B SV Shares that is the quotient of the Net Asset Value per Unit of the Class F Units divided by the Net Asset Value per Unit of Class A Units, in each case determined as of the Determination Time (which quotient is referred to as the “Class F – Class A NAV Ratio”), unless a Class A Election or Class B Election from the Class F Unitholder was received by CDS prior to the Election Deadline. Class F Unitholders that submit a Class A Election prior to the Election Deadline shall receive that number of NewCo Class A MV Shares that is equal to two times the Class F – Class A NAV Ratio (and nil Newco Class B SV Shares) for each Class F Unit. Class F Unitholders that submit a Class B Election prior to the Election Deadline shall receive that number of NewCo Class B SV Shares that is equal to two times the Class F – Class A NAV Ratio (and nil Newco Class A MV Shares) for each Class F Unit.
NewCo Class A MV Shares confer the right to thirty (30) votes per share at any meeting of shareholders of NewCo, while NewCo Class B SV Shares confer the right to one (1) vote per share at such meetings. The Articles of NewCo provide that dividends shall be payable at the discretion of the Board of Directors of NewCo, provided that the Board may not declare a dividend on one class of shares without concurrently declaring a dividend on the other class of shares, and providing further that each dividend on the NewCo Class B SV Shares shall be $0.05 per share higher than the dividend declared on the NewCo Class A MV Shares. The Articles of NewCo also contain “coattail” provisions whereby, under certain circumstances where a takeover bid is made for the NewCo Class A MV Shares and a concurrent takeover bid is not made at the same price for the NewCo Class B SV Shares, the holders of NewCo Class B SV Shares have the right to convert such shares to NewCo Class A MV Shares for the purpose of tendering to such takeover bid so long as certain conditions are met. The foregoing is a summary only of the voting and dividend rights of the NewCo shares. Investors should refer to the Circular for a more detailed description of such rights.
If approved, the Arrangement is expected to be effected on or around June 5, 2018. The Fund will apply to the Toronto Stock Exchange to have the Class A Units voluntarily delisted immediately prior to the effective date of the Arrangement. Following completion of the Arrangement, the Fund will apply to cease being a reporting issuer and, after a transitional period, the Fund will be wound-up such that NewCo will acquire all of the property and assets and assume all of the liabilities of the Fund. NewCo will not be considered an investment fund for regulatory purposes and the specific regulatory regime applicable to investment funds like the Fund is no longer applicable.
The Arrangement will require approval by at least 66⅔% of the votes cast by Unitholders present in person or represented by proxy at the Special Meeting. In addition, because NewCo Class A MV Shares and NewCo Class B SV Shares are “restricted shares” for purposes of OSC Rule 56-501 – Restricted Shares, the distribution of the NewCo Class A MV Shares and NewCo Class B SV Shares pursuant to the Arrangement must also be approved by a majority of the votes cast by Unitholders other than the votes attaching at the time to Units held directly or indirectly by affiliates of the Fund and Units held directly and indirectly by control persons of the Fund.
Completion of the proposed Arrangement is also conditional on the approval of the Ontario Securities Commission, issuance of a final order by the Court, the approval for listing of the NewCo Class A MV Shares and NewCo Class B SV Shares on a stock exchange in Canada, and other customary closing conditions.
If the Arrangement is not approved, Lysander expects to terminate the Fund. In accordance with the declaration of trust of the Fund dated September 25, 2013 (the “Declaration of Trust”), Lysander will provide not less than 30 days’ prior written notice to Unitholders by way of a press release of any decision to terminate the Fund.
Further details of the Arrangement are set out in the Arrangement Agreement and the Circular, both of which have been filed by the Fund on SEDAR at www.sedar.com.
Annual Redemption Right
Pursuant to the annual redemption right under the Declaration of Trust, Class A Units and Class F Units may, at the option of Unitholders, be surrendered for redemption during the period commencing on March 15, 2018 and ending at 5:00 p.m. (Toronto time) on March 29, 2018 (the “Notice Period”). Class A Units or Class F Units which are surrendered for redemption during that period will be redeemed on May 31, 2018, in respect of each class of Units, at a redemption price per Unit that is equal to 100% of the Net Asset Value per Unit of that class as of May 31, 2018, less any costs and expenses incurred by the Fund in connection with funding the redemption.
The Declaration of Trust provides that Lysander, as Trustee of the Fund, may, in its sole discretion, permit the withdrawal of redemption notices. As details of the Arrangement were not made public until the filing and mailing of the Circular dated March 16, 2018, Lysander will exercise its discretion to permit the withdrawal of any redemption notices made during the Notice Period and such withdrawals made prior to 5:00 p.m. (Toronto time) on April 11, 2018. Any expense associated with the preparation and delivery of the redemption notice or its withdrawal will be for the account of the Unitholder exercising the redemption privilege.
Under the Arrangement, Unitholders of the Fund will become shareholders of NewCo. A transfer of Units of the Fund to NewCo for NewCo Class A MV Shares and/or NewCo Class B SV Shares will be a disposition for Canadian income tax purposes, which may result in a capital gain or loss to Unitholders who hold their Class A Units and Class F Units outside of registered plans. Such Unitholders may be entitled to obtain a full or partial tax deferral subject to making a joint tax election with NewCo. Unitholders who redeem their Class A Units and/or Class F Units prior to the Arrangement will realize a capital gain or loss for Canadian income tax purposes. Unitholders are encouraged to seek counsel from their investment and tax advisors with respect to the Arrangement.
Lysander is the trustee and investment fund manager of the Fund. The head office of Lysander is located at 100 York Blvd., Richmond Hill, Ontario L4B 1J8.
For further information on Lysander, please visit www.lysanderfunds.com or firstname.lastname@example.org or you can reach Lysander at 1-877-308-6979.
Lysander Funds Limited
Tel. No. 416-640-4275
Fax No. 905-764-0000
Forward Looking Information
This press release contains forward-looking statements and information within the meaning of applicable securities legislation. Forward-looking statements can be identified by the expressions “seeks”, “expects”, “believes”, “estimates”, “will”, “target” and similar expressions. The forward-looking statements are not historical facts but reflect the current expectations of Lysander regarding future results or events and are based on information currently available to it. Certain material factors and assumptions were applied in providing these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements. Lysander believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions; however, Lysander can give no assurances that the actual results or developments will be realized. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under “Risk Factors” in the annual information form of the Fund dated March 24, 2017. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. Lysander undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances except as required by securities laws. These forward-looking statements are made as of the date of this press release.