TSX Symbol: CIX
TORONTO, April 29 /CNW/ - CI Financial Corp. ("CI") today announced that
it has received notification from the Toronto Stock Exchange that the
continuation of CI's Shareholder Rights Plan for a further three-year
term must be approved by a vote of all shareholders, including the Bank
of Nova Scotia, in addition to a vote of only the independent
shareholders of CI.
This decision by the Toronto Stock Exchange follows a request made to it
by the Bank of Nova Scotia on April 1, 2011, to require CI to permit
the Bank to vote on the continuation of the Shareholder Rights Plan. CI
disagreed with the Bank's request and asked the Toronto Stock Exchange
to permit the ratification vote to be conducted in accordance with the
terms of the Plan. CI's Shareholder Rights Plan has a six year term,
however the Board is required to provide independent shareholders with
an opportunity at the 2011 Annual Meeting of Shareholders to decide
whether they want the Plan to continue for the remaining three years.
The Bank of Nova Scotia is not an independent shareholder, as that term
is defined in the CI Shareholder Rights Plan because it has been
excluded or "grandfathered" from the operation of the Plan. The Bank
of Nova Scotia voted in favour of the adoption of the Plan in 2008, but
has stated, through its counsel, in a submission to the Toronto Stock
Exchange, that it did not understand the terms of the Plan and in any
event, circumstances and expectations have changed, which is why it now
wants the opportunity to vote on the continued existence of the Plan
for the final three years of the term. One circumstance that has
changed is that the Bank of Nova Scotia recently acquired DundeeWealth,
CI's direct competitor.
The Toronto Stock Exchange does not require shareholder ratification for
the continuation of an existing shareholder approved rights plan and
accordingly, CI had asked the Exchange to agree that the terms of the
Plan would govern this situation rather than create new rules and
effectively amend the Plan at the request of the Bank of Nova Scotia.
Notwithstanding this, the Toronto Stock Exchange has today decided to,
in effect, vary the express terms of CI's shareholder approved Plan and
require CI to permit the Bank of Nova Scotia to participate in the
"We are shocked that the Toronto Stock Exchange has decided to favour
the Bank of Nova Scotia and impose this change on CI's other
shareholders. It defeats the purpose of good governance when the TSX
can impose a change to the terms of our shareholder approved plan, as a
result of pressure from the Bank. CI has no alternative but to comply
with this decision and put this matter behind us," said Stephen A.
MacPhail, President and Chief Executive Officer of CI. "We continue to
be perplexed at what could have motivated the Bank of Nova Scotia to
put CI through such a colossal expenditure of time and money. Since
the Bank bought its interest in CI, our share price is up 43%, our
assets under management are up 33% and our earnings per share (before
interest, taxes, depreciation and amortization) are up 44%, so we can
not see how, as shareholders, they are disappointed with CI's
performance. The Plan is extremely important to the interests of all
shareholders. We are confident that our shareholders, other than the
Bank, appreciate the strategic importance of the Plan and the
protection that it provides, and based on feedback that we have
received to date, the independent shareholders who control 64% of CI's
shares will overwhelmingly support the continuation of the shareholder
The primary objective of the Plan is to enhance shareholder value and
ensure that, in the context of a bid for control of CI, all
shareholders are treated equally. The Plan precludes any accumulation
of a significant stake in CI without offering a control premium to all
shareholders. The Plan does not preclude a takeover of the company as
long as the transaction is fair and in the best interests of the
company, but it does provide the Board of Directors with more time to
find an alternative value enhancing transaction.
The Bank of Nova Scotia currently owns approximately 36% of the
outstanding common shares of CI. It was exempted from the operation of
the Plan even though its ownership interest exceeds the Plan's
triggering ownership threshold of 20%, which is the takeover bid
threshold under Canadian securities laws. The Plan prevents the Bank
from increasing its ownership position and, accordingly, the Bank is
precluded from making a creeping takeover and acquiring control of CI
without making an offer to all other shareholders. If the Bank of Nova
Scotia sells its shares of CI, the purchaser will not be grandfathered
and the acquisition will trigger the operational provisions of the Plan
unless the sale is made pursuant to a take-over bid which meets the
definition of a Permitted Bid under the Plan. The Plan ensures equal
treatment of all CI shareholders in the context of a change of control.
CI has also announced that, if the shareholders approve the continuation
of the Plan, they will be asked to approve amendments to the Plan. The
Plan will be updated through the amendments to reflect the
recommendations of the Institutional Shareholder Services in their
Canadian Governance Policy and incorporate developments to shareholder
rights plans since the Plan was adopted in December 2008.
CI's shareholders will be asked to ratify the continuance of the Plan
and approve the amendments to the Plan at the annual and special
meeting of shareholders, which will be held at 11:00 a.m. on June 1,
2011 at CI's offices at 15 York Street, Toronto. Shareholders of record
on April 29, 2011 will be entitled to vote at the meeting. The
management information circular, which will be mailed to shareholders
in early May, will provide further details on this vote and other
matters to be brought before the meeting.
CI Financial Corp. (TSX: CIX) is an independent, Canadian-owned wealth
management company with approximately $98.9 billion in assets as of
March 31, 2011. CI offers a broad range of investment products and
services, including an industry-leading selection of investment funds,
and is on the Web at www.ci.com/cix.
SOURCE CI Investments Inc.
For further information:
Stephen A. MacPhail
President and Chief Executive Officer
CI Financial Corp.