Constellation Software Inc. (TSX: CSU) (the
“
Company”) announced today that it has resolved to
pay a special dividend (the “
Warrant
Dividend”), pursuant to which all common
shareholders of record on August 24, 2023 (the “
Record
Date”) will be entitled to receive, by way of a
dividend-in-kind, one warrant of the Company (collectively, the
“
Warrants”) for each common share of the Company
(the “
Common Shares”) held. More information about
the features of the Warrants are included below.
The payment date for the Warrant Dividend is
expected to be on or about August 29, 2023. The Common Shares will
commence trading on an ex-dividend basis at the opening of markets
on August 23, 2023.
Separately, the Company has recently announced
its intention to issue up to an additional C$700 million aggregate
principal amount of unsecured subordinated floating rate
debentures, Series 1 of the Company (the “Series 1
Debentures”) pursuant to a rights offering (the
“Rights Offering”). The Series 1 Debentures issued
pursuant to the Rights Offering are expected to be issued as an
additional tranche of, and treated as a single series with, the
currently outstanding C$282.2 million aggregate principal amount of
Series 1 Debentures.
The Series 1 Debentures contain a
“Company Redemption Right”, which is an existing
right of the Company contained in the trust indenture (as
supplemented) governing the Series 1 Debentures, and is described
in the prospectuses filed by the Company in 2014, 2015 and 2023 in
connection with the distribution of Series 1 Debentures. Pursuant
to the Company Redemption Right, the Series 1 Debentures are
redeemable at the Company’s option annually, during a specified
period, upon no more than five years’ and 15 days’ and no less than
five years’ notice.
The Warrants will not be exerciseable by the
holders thereof unless and until the Company exercises the Company
Redemption Right in respect of the Series 1 Debentures. If the
Company exercises the Company Redemption Right, each Warrant will
become exercisable by the holder thereof for a period of 30
calendar days (the “Warrant Exercise Period”)
starting from the date that the Company provides notice to the
holders of its Series 1 Debentures that the Company is exercising
the Company Redemption Right to redeem Series 1 Debentures.
Following notice by the Company of the exercise
of the Company Redemption Right, each Warrant will, upon exercise,
entitle the holder thereof to receive, on the 10th business day
following the last date of the Warrant Exercise Period (the
“Series 2 Issuance Date”) C$100 principal amount
of unsecured subordinated floating rate debentures, Series 2 of the
Company (the “Series 2 Debentures”) for each C$100
principal amount of Series 1 Debentures tendered for repurchase by
the Company.
The Company will pay any accrued and unpaid
interest on the Series 1 Debentures tendered for repurchase up to,
but excluding, the Series 2 Issuance Date. Other than tendering the
Series 1 Debentures for repurchase, no additional exercise price
will be owing by a holder of a Warrant upon the exercise of a
Warrant.
The Series 2 Debentures will be identical in all
material respects to the Series 1 Debentures, except that the
Series 2 Debentures will not include a Company Redemption Right.
Since the Series 2 Debentures will not contain a Company Redemption
Right, the Company anticipates that the exercise by holders of the
Warrants would neutralize the impact of an exercise of the Company
Redemption Right in respect of the corresponding principal amount
of Series 1 Debentures.
The Company has no current intention to exercise
the Company Redemption Right under the Series 1 Debentures.
The Warrants will not be listed on the Toronto
Stock Exchange (“TSX”) or any other exchange at
the time of issuance. If and when the Company Redemption Right is
exercised, the Company plans to apply to list the Warrants on the
TSX, so that the Warrants would trade on the TSX during the Warrant
Exercise Period. The Company’s ability to list the Warrants will be
subject to the approval of the TSX at such time.
All unexercised Warrants will expire on the
earlier of (i) the first date on which all the outstanding Series 1
Debentures have matured or have otherwise been repurchased,
redeemed or cancelled, and (ii) March 31, 2040.
Following the distribution of the Warrant
Dividend, there will be 21,191,530 Warrants outstanding. The
Company currently has 2,822,869 Series 1 Debentures outstanding and
it intends to issue additional Series 1 Debentures from
time-to-time, including in the near-term pursuant to the Rights
Offering. The Company intends to ensure that the number of Warrants
outstanding at any given time will significantly exceed the number
of Series 1 Debentures outstanding at any given time.
In addition, if and when the Company Redemption
Right is exercised, the Company plans to attempt to ensure Warrants
are available to be acquired by any holder of Series 1 Debentures
that wants to acquire them.
The Company has determined that the Warrants
will have a nominal fair market value of C$0.0001 per Warrant at
the time of the Warrant Dividend.
At the time the Warrants are issued, they should
generally be qualified investments under the Income Tax Act
(Canada) for a trust governed by a registered retirement savings
plan, deferred profit sharing plan, registered retirement income
fund, registered education savings plan, registered disability
savings plan, and a tax free savings account. However, the Company
makes no assurances that the Canada Revenue Agency would not take a
different view. Accordingly, holders who intend to hold the
Warrants in any such plan should consult their own tax
advisors.
This press release does not constitute an offer
to sell, or the solicitation of an offer to buy, any securities of
the Company.
Forward Looking Statements
The statements contained in this press release
which are not historical facts are forward-looking statements,
which involve risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the
Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Words such as “may”, “will”, “expect”,
“believe”, “plan”, “intend”, “should”, “anticipate” and other
similar terminology are intended to identify forward-looking
statements. These statements reflect current assumptions and
expectations regarding future events and speak only as of the date
of this press release. Forward-looking statements involve
significant risks and uncertainties, should not be read as
guarantees of future performance or results, and will not
necessarily be accurate indications of whether or not such results
will be achieved. A number of factors could cause actual results to
vary significantly from the results discussed in the
forward-looking statements.
About Constellation Software Inc.
The Common Shares are listed on the TSX under
the symbol “CSU”. The Series 1 Debentures are listed on the TSX
under the symbol “CSU.DB”. The Company acquires, manages and builds
vertical market software businesses.
For further information please contact:
Jamal BakshChief Financial
Officer416-861-9677info@csisoftware.comwww.csisoftware.com
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