Canso Select Opportunities Corporation Announces Purchase of Shares From Canso Fund Management Ltd.
Canso Select Opportunities Corporation
6 min read
Not for distribution to U.S. news services or dissemination in the United States
RICHMOND HILL, Ontario, Oct. 17, 2022 (GLOBE NEWSWIRE) -- Canso Select Opportunities Corporation (TSX Venture: CSOC.A, CSOC.B) (the "Company" or "CSOC") is pleased to announce that it has agreed to purchase 70,000 Class A common shares of Lysander Funds Limited (the “Lysander Class A Shares”) from Canso Fund Management Ltd. (“CFM”) by issuing to CFM 2,440,239 Class B subordinate voting shares of the CSOC pursuant to a share purchase agreement dated October 17, 2022 (the "Transaction"). The consideration has an approximate value of $12.25 million. Following the Transaction, it is expected that CFM will hold approximately 68% of the Company’s outstanding Class B subordinate voting shares, which represents a voting position of 4.7%.
The purpose of the Transaction is to diversify the Company’s portfolio and to increase its cash flows by way of consistent dividends. The Company does not currently hold any Lysander Class A Shares or Class B common shares of Lysander Funds Limited (“Lysander”). As a result of the Transaction, the Company’s holdings of Lysander will represent approximately 13% of the Lysander Class A Shares outstanding and the Company’s beneficial ownership interest in Lysander will be approximately 9%. Lysander is a retail fund management company within the Canso Investment Counsel (“Canso”) group, as the fund manager of the Lysander-Canso funds and an affiliate of Canso under common control. The value of Lysander’s business consists of its expected revenue, net income, and the assets it holds. Blair Franklin has determined that, as of October 17, 2022, subject to the assumptions, limitations and qualifications contained in its valuation opinion, that the fair market value of the Lysander Class A Shares to be acquired by CSOC is between $11.2 million and $13.3 million.
The Transaction represents a long-term attractive growth opportunity. Lysander is currently paying a quarterly dividend of $1.50 per share. If this dividend payment is maintained, it will represent $420,000 in additional revenue annually to the Company.
The Company and CFM are related parties since they are both controlled directly and indirectly by John Carswell. John Carswell, a director of the Company and a member of the investment committee of the Company, exercises direct or indirect control or direction over, approximately 46% of the voting rights of the Company and beneficially owns, directly or indirectly, approximately 28% of the Company. In addition, John Carswell, a director of Lysander, exercises direct or indirect control or direction over, approximately 84% of Lysander and beneficially owns, directly or indirectly, approximately 61% of Lysander. As a result of the Transaction, John Carswell’s direct and indirect proportionate ownership of the Company will increase by approximately 14% and his direct and indirect control of the Company will increase slightly by approximately 0.6%. As well, his proportionate ownership in Lysander will decrease slightly by 1.4% and his direct and indirect control of Lysander will decrease by approximately 1.9%.
Each of Timothy Hicks, Neda Bizzotto, Shirley Sumsion, Heather Mason-Wood and John Carswell are directors and senior officers of both the Company and CFM. In the aggregate, they beneficially own, directly or indirectly approximately 30% and 68% of the Company and Lysander, respectively. In addition, certain other directors and officers of the Company, in the aggregate, beneficially own, directly or indirectly, approximately 0.7% of the Company and approximately 2.3% of Lysander. As a result of the Transaction, their collective indirect proportionate ownership in the Company will increase by approximately 18% and their collective indirect proportionate ownership in Lysander will decrease slightly by approximately 1.8%.
The Transaction is deemed to be a "related party transaction" as defined under Multilateral Instrument 61-101—Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Pursuant to MI 61-101, the Transaction is subject to minority shareholder approval (i.e., approval by a majority of the votes cast at a meeting of shareholders excluding any shares held by interested parties, related parties and joint actors) (“Minority Approval”). The Company will seek Minority Approval at a meeting of shareholders scheduled to be held on January 11, 2023 (“Minority Shareholder Meeting”). Closing of the Transaction is also subject to the approval of the TSX Venture Exchange. If both Minority Approval and exchange approvals are obtained, the Transaction is expected to close on or about January 13, 2023.
The Transaction has been reviewed by both the Company’s investment committee as well as a special committee (the "Special Committee") comprised of members of the board of directors (the “Board”) who are independent of CSOC. Although the Transaction is exempt from the formal valuation requirements of MI 61-101 pursuant to subsections 5.5(b) of MI 61-101 as the Company is not listed on a specified market, the Special Committee decided not to rely on the exemption from the formal valuation requirement and retained Blair Franklin Capital Partners Inc., (“Blair Franklin”) in its capacity as an independent financial advisor, to provide a formal valuation of the Lysander Class A Shares being acquired by CSOC. In addition, Blair Franklin has provided a fairness opinion to the Special Committee, stating that, in their opinion and subject to the assumptions, limitations and qualifications contained in the fairness opinion, as of the date of the fairness opinion, the Consideration paid for the Lysander Class A Shares is fair, from a financial point of view, to the Company. After reviewing the valuation opinion and fairness opinion of Blair Franklin, the Special Committee determined that it is in the best interests of, or fair to, shareholders of the Company to recommend the Transaction to the Board and unanimously recommended the Transaction to the Board. The Board reviewed and considered the recommendation of the Special Committee and provided its approval of the Transaction on October 17, 2022. Each of John Carswell, Heather Mason-Wood, Timothy Hicks, Shirley Sumsion and Neda Bizzotto declared their interest with respect to the Transaction and abstained from voting and each will also abstain from voting at the Minority Shareholder Meeting.
About CSOC
CSOC is a publicly-listed, investment company focused on maximizing long-term total returns to shareholders by investing in an actively managed portfolio consisting primarily of Canadian and global holdings which could include large illiquid positions in private and public equity, debt, loans, real estate and infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has in any way passed upon the merits of the proposed transactions and neither of the foregoing entities has approved or disapproved of the contents of this press release.
More information on the Company may be found on the Company’s website at www.selectopportunitiescorporation.com
For further information, please contact: Timothy Hicks, CEO Canso Select Opportunities Corporation thicks@selectopportuntitiescorporation.com Tel : 647-956-6264
Forward Looking Information
This press release contains forward-looking statements and information within the meaning of applicable securities legislation. Forward-looking statements can be identified by the words “seeks”, “expects”, “believes”, “estimates”, “will”, “target” and similar expressions. The press release contains forward-looking statements specifically with respect to the Transaction, the proposed shareholder meeting, Exchange approval and the anticipated benefits of the Transaction for CSOC shareholders. These forward-looking statements reflect the current expectations of CSOC and management regarding future results or events and are based on information currently available to it. Certain material factors and reasonable assumptions were applied in providing these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements. CSOC believes that the expectations reflected in forward looking statements are based upon reasonable assumptions; however, CSOC can give no assurances that the actual results or developments will be realized. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These risks include, but are not limited to, market risks, transaction risks, the results of minority shareholder voting and dealing with the Exchange. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward looking statement speaks only as of the date on which such statement is made. CSOC undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances except as required by securities laws. These forward-looking statements are made as of the date of this press release.
Additional information about CSOC is available under its SEDAR profile at www.sedar.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
