# CANADIAN BANC CORP (BK) Annual Concurrent Retraction Privilege



## depassp (Mar 22, 2020)

I'm hoping for some guidance and/or confirmation. I own Class A shares of Canadian Banc Corp (BK) at an ACB of 10.80/share.

Canadian Banc Corp has offered to purchase its outstanding Class A Common Shares and Preferred Shares in connection with an Annual Concurrent Retraction Privilege.

My options are:

Take no action
Tender Class A Common Shares and Preferred Shares for Concurrent Retraction (Consent to Resale): Purchase price will be determined via the sale of Shares by the Recirculation Agent, less any costs associated with funding the redemption
Tender Class A Common Shares and Preferred Shares for Concurrent Retraction (Withhold Consent): Purchase price will be equal to the Net Asset Value per Unit (Class A Common Shares and Preferred Shares combined) as of the Retraction Date, less any costs associated with funding the redemption
I've read the prospectus (https://03fd212c-7b45-4409-b290-698...d/78f11d_258ee2860754490ea7465c42e059372e.pdf) but I'm still a little confused.

Page 22 states

"... holders of Class A Shares whose shares are surrendered for retraction will be entitled to receive a retraction price per share (‘‘Class A Share Retraction Price’’) equal to 96% of the Net Asset Value per Unit determined as of the Retraction Date less the cost to the Company of the purchase of a Preferred Share in the market for cancellation and less any other applicable costs"

As of June 15, 2020, NAV pre-distribution was $16.96.

The Close Price of BK.PR.A on June 16, 2020 was $10.25 ( BK.PR.A – Historical Prices for Canadian Banc Corp – MSN Money )

If the retraction date was June 16, I compute the retraction price as:

96% * 16.96 - 10.25 - other costs = 6.0316 - other costs

On June 16, the Class A share price closed at 6.85, which is MORE than the price I would receive.

Is that right? If so, why would I tender my shares and receive less than I would receive by just selling them on the open market? Am I missing something?


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## hycm53 (May 11, 2019)

depassp said:


> I'm hoping for some guidance and/or confirmation. I own Class A shares of Canadian Banc Corp (BK) at an ACB of 10.80/share.
> 
> Canadian Banc Corp has offered to purchase its outstanding Class A Common Shares and Preferred Shares in connection with an Annual Concurrent Retraction Privilege.
> 
> ...


I have the same situation, but I won't tender my shares, because the company didn't said what is the accurately price they will pay.


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## fireseeker (Jul 24, 2017)

depassp said:


> I'm hoping for some guidance and/or confirmation. I own Class A shares of Canadian Banc Corp (BK) at an ACB of 10.80/share.
> 
> Canadian Banc Corp has offered to purchase its outstanding Class A Common Shares and Preferred Shares in connection with an Annual Concurrent Retraction Privilege.
> ...
> Is that right? If so, why would I tender my shares and receive less than I would receive by just selling them on the open market? Am I missing something?


There are a couple of points that may be creating confusion.

Technically, BK is not offering to buy your shares. It's a retraction privilege -- meaning you can simply exercise your right to have the company take back the shares.

Now, this right is not unlimited. It can only be done at certain times, at certain terms.

Right now, the annual retraction is available to you. It pays out at 100% of NAV less costs not to exceed 1%. (Based on my quick read of the annual information form.) 
But you must surrender a preferred share along with each common share. You don't have preferred shares, so you'd have to buy them to take advantage of this option.

The 96% payout offer is part of a second retraction right available to you, the monthly retraction. For this, you don't need preferred shares but, as you point out, the terms are unattractive.

In both cases, there is a long lag time before you receive payment. In fact, as hycm53 points out, the exact terms of the payout are not known yet, because it's based on a future NAV.

As far as I am concerned, the key in all this is that NAV. As of June 15, the NAV for the combined units was reported as $16.96. That means $10 for the preferred shares and $6.96 for the Class A common shares.

If you want to sell your shares now, your options are a) to take the $6.85 that the market is offering, which is just less than NAV; or b) buy preferred shares and offer both to the company under the annual retraction. This will almost certainly leave you with less than $6.85, because you'd have to pay a premium for the preferred shares.

Of course, you can always take the default option, #1, and do nothing.


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