DHX Media Ltd. announced yesterday that the Company intends to make a substantial issuer bid (the “Offer”), pursuant to which the Company will offer to purchase for cancellation up to $5 million in value of its common shares (“Shares”) from shareholders (the “Shareholders”). The Offer will proceed by way of a modified “Dutch Auction” and the range of Offer prices will be between $0.60 to $0.70 per share, with increments of $0.01 permitted within that range.
The Board of Directors of DHX Media (the “Board”) has determined that the Offer is in the best interest of the Company and its shareholders and is the most equitable and efficient way to distribute up to $5 million to its shareholders while proportionately increasing the equity interest in the Company of shareholders who do not tender to the Offer. After giving effect to the Offer, the Company will continue to have sufficient financial resources and working capital to conduct its ongoing business and operations and the Offer is not expected to preclude DHX Media from pursuing strategic acquisitions, its foreseeable business opportunities or the future growth of the Company’s business.
The modified “Dutch Auction” tender process allows shareholders to individually select the price, within the specified range, at which they are willing to sell all or a portion of their Shares. When the Offer expires, DHX Media will determine the purchase price (“Purchase Price”) which will be the lowest tendered price within the range of prices allowing it to buy up to $5 million of the Shares validly tendered to the Offer. All Shares tendered at or below the selected price level will be bought at the Purchase Price, subject to proration in the event that the aggregate cost to purchase all the Shares tendered at below the Purchase Price (including the purchase of odd lots tendered) exceeds $5 million. All Shares tendered at prices higher than the Purchase Price will be returned to shareholders. The Company will fund any purchase of Shares pursuant to the Offer from available cash on hand. The Offer will expire at 5:00 p.m. (Eastern Standard Time) on December 29, 2011 unless the Offer is extended, varied or withdrawn by DHX Media.
The Offer will be for up to a maximum of approximately 14% of the total number of issued and outstanding common shares (based on a Purchase Price equal to the minimum purchase price per Share of $0.60 and 60,554,996 Shares outstanding on November 18, 2011). If the Purchase Price is higher than the minimum a smaller percentage of the issued and outstanding Shares will be purchased.
The Offer will not be conditional on any minimum number of Shares being tendered to the Offer, but will be subject to other conditions customary for transactions of this nature. It is anticipated that the formal offer to purchase, issuer bid circular and other related documents (“Offer Documents”), containing the terms and conditions of the Offer and instructions for tendering Shares will be mailed to shareholders and filed with the applicable regulators and available on SEDAR on or about November 23, 2011. The Offer will remain open for acceptance for at least 35 days after the date of commencement, unless withdrawn or extended by the Company.
The Board has authorized the making of the Offer. Neither the Company nor its Board makes any recommendation to shareholders as to whether to tender or refrain from tendering their Shares to the Offer. Shareholders are urged to consult their own financial, tax and legal advisors and to make their own decisions whether to tender or to refrain from tendering their Shares to the Offer and, if so, how many Shares to tender and at what price or prices.
Further information, including the factors considered by the Company and the Board in making its decision to authorize making the Offer, along with the terms and conditions of the Offer, will be contained in the Offer Documents that will be mailed to shareholders and available on SEDAR when the Offer is formally commenced.