TORONTO - Dundee Corporation (TSX: DC.A) (the 'Corporation' or 'Dundee') today announced its financial results for the three months ended June 30, 2020.
During the second quarter of 2020, the Corporation recognized net earnings attributable to owners of Dundee Corporation of $52.2 million, or earnings of $0.49 per share, before the effect of any dilutive securities. This compares with a loss of $7.9 million or $0.12 per share incurred during the same quarter of the prior year.
Operating results during the second quarter of 2020 reflect a $97.4 million market appreciation (2019 - $5.1 million) in certain of the Corporation's investments that are carried in the consolidated financial statements at Fair Value Through Profit or Loss ('FVTPL').
'During the second quarter we completed the sale transaction of a significant portion of our holdings in Dundee Precious Metals. This transaction allowed us to generate a significant amount of capital to support our growth strategy for the Corporation, while allowing Dundee Precious to expand its shareholder base and continue with its market re-rating,' said Jonathan Goodman, Chairman and CEO.
'Subsequent to quarter end, we announced a substantial issuer bid for up to $44 million of the outstanding Series 2 Preference Shares. This offer, combined with the Dundee Precious transaction, were two important strategic steps in support of our efforts to streamline our capital structure,' added Mr. Goodman.
SALE OF DUNDEE PRECIOUS METALS SHARES AND WARRANTS
On May 7, 2020, the Corporation announced that it had entered into an agreement with RBC Dominion Securities Inc. and Stifel GMP (together, the 'Dealers') to sell 20 million units (the 'Units') at a price of $6.35 per Unit to qualified purchasers. The size of this secondary offering being made pursuant to an agreement with the Dealers was subsequently upsized to sell 23.9 million units at a price of $6.35 per Unit to qualified purchasers, for gross proceeds to Dundee of $151.8 million.
Prior to the Sale Transaction, Dundee held 35.9 million of Dundee Precious Shares, representing an approximate 19.83% interest in Dundee Precious. Upon closing of the Sale Transaction, Dundee will own 12.0 million Dundee Precious Shares representing an approximate 6.62% interest in Dundee Precious.
In the event that the Warrants forming part of the Units are exercised in full, Dundee will dispose of an additional 12.0 million Dundee Precious Shares at a value of $8.00 per Dundee Precious Share (being the exercise price of the Warrants), for additional gross proceeds to Dundee of $95.6 million. This further disposition will result in an additional decrease in Dundee's shareholdings in Dundee Precious, and Dundee would then hold 31,552 Dundee Precious Shares, representing less than 1% of the currently issued and outstanding Dundee Precious Shares.
SUBSTANTIAL ISSUER BID FOR SERIES 2 PREFERRED SHARES
On July 22, 2020, the Corporation announced that it intends to commence a substantial issuer bid (the 'Offer') to purchase for cancellation from the holders thereof who choose to participate up to $44 million in value of its Cumulative 5-Year Rate Reset First Preference Shares, Series 2 in the capital of the Corporation (the 'Series 2 Shares'). The Offer is being made by way of a 'modified Dutch auction', which will allow holders who choose to participate in the Offer to individually select the price, within a price range of not less than $16.00 and not more than $18.50 per Series 2 Share (in increments of $0.10 per Share), at which they will tender their Series 2 Shares to the Offer. Upon expiry of the Offer, the Corporation will determine the lowest purchase price (the 'Purchase Price') (which will not be less than $16.00 and not more than $18.50 per Series 2 Share) based on all tenders validly deposited and not properly withdrawn pursuant to the Offer that will allow it to purchase the maximum number of Series 2 Shares tendered to the Offer, having an aggregate purchase price not exceeding $44 million.
In addition to the Purchase Price, Shareholders who have Series 2 Shares taken up and paid for by the Corporation pursuant to the Offer will be entitled to receive the portion of any quarterly cash dividend declared by the Board of Directors on such Series 2 Shares for the quarter ended September 30, 2020, with such portion of the quarterly cash dividend per Series 2 Share being equal to the amount obtained when the amount of any quarterly dividend that would otherwise have been payable in respect of the dividend period is multiplied by a fraction, the numerator of which is the number of calendar days in such dividend period that such Series 2 Share has been outstanding (to but excluding the date of being taken up) and the denominator of which is the number of calendar days in such dividend period. As an example, assuming the Offer expires on August 27, 2020, the Series 2 Shares are taken up and paid for by the Corporation on August 31, 2020 and a dividend consistent with the prior quarter was declared on the series 2 Shares, the accrued dividend amount payable per Series 2 Share validly tendered, taken up and paid for under the Offer is estimated to be approximately $0.22.
The Offer will expire at 5:00 p.m. (Toronto time) on August 27, 2020 or such later time and date to which the Offer may be extended by Dundee, unless varied or withdrawn by Dundee.
COVID-19 UPDATE
During the COVID-19 pandemic, the Corporation continues to make the health and well-being of its employees a top priority. The Corporation's business continuity plan has been in place since early March and has helped maintain orderly business operations during the pandemic. As a result, all head office employees continue working from home and are expected to do so for the foreseeable future, limiting their personal risks and helping ensure their safety. The Corporation is monitoring information from local health authorities and all levels of government on a daily basis.
'The safety of our employees remains our top priority as we continue to manage through these challenging times,' said Robert Sellars, Executive Vice President and CFO. 'Once again, we would like to thank our employees for their dedication and productivity which has allowed us to continue operations without interruption.'
ABOUT DUNDEE CORPORATION
Dundee Corporation is a public Canadian independent holding company, listed on the Toronto Stock Exchange under the symbol 'DC.A'. Through its operating subsidiaries, Dundee Corporation is engaged in diverse business activities in the areas of investment advisory, corporate finance, energy, resources, agriculture, real estate and infrastructure. Dundee Corporation also holds, directly and indirectly, a portfolio of investments mostly in these key areas, as well as other select investments in both publicly listed and private enterprises.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking information within the meaning of applicable securities legislation, which reflects Dundee Corporation's current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dundee Corporation's control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under 'Risk Factors' in the Annual Information Form of Dundee Corporation and subsequent filings made with securities commissions in Canada. Dundee Corporation does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Contact:
John Vincic
Tel: (647) 402-6375
Email: jvincic@dundeecorporation.com
DUNDEE CORPORATION 