Constellation Software Inc. (TSX: CSU) (the
“
Company”) announced today that it has declared a
special dividend (the “
Rights Dividend”) pursuant
to which all common shareholders (the
“
Shareholders”) of record as of the close of
business on September 1, 2023 (the “
Record Date”)
will be entitled to receive, by way of a dividend-in-kind, one
right of the Company (each, a “
Right”) for each
common share of the Company (the “
Common Shares”)
held. This dividend has been designated as an eligible dividend for
purposes of the Income Tax Act (Canada) and any similar provincial
and territorial legislation.
The Company also announced that it has filed a
final short form prospectus (the “Final
Prospectus”) in relation to its previously announced
rights offering (the “Rights Offering”) pursuant
to which the Company will issue the Rights in satisfaction of the
Rights Dividend that will entitle the Shareholders to purchase up
to C$700 million aggregate principal amount of unsecured
subordinated floating rate debentures, Series 1 of the Company (the
“Series 1 Debentures”).
The Series 1 Debentures will be issued as an
additional tranche of, and will form a single series with, the
outstanding C$282.2 million aggregate principal amount of unsecured
subordinated floating rate debentures, Series 1 of the Company.
There is no minimum principal amount of Debentures that must be
issuable upon the exercise of Rights.
The net proceeds of the Rights Offering are
expected to be used by the Company to pay down indebtedness under
its existing credit facility (the “Credit
Facility”), with any remaining proceeds to be used for
future acquisitions.
The Rights will be issued in satisfaction of the
Rights Dividend in the amount of one Right per Common Share. For
every 3.03 Rights held, the holder of such Rights will be entitled
to subscribe for C$100 principal amount of Series 1 Debentures. The
Rights and the Series 1 Debentures will be qualified for
distribution in each province and territory of Canada by way of the
Final Prospectus and the Debentures have been registered in the
United States on Form F-7 under the United States Securities Act of
1933, as amended.
The Series 1 Debentures are expected to be
issued on October 6, 2023 (the “Issue Date”) and
will have the same terms and conditions as the currently
outstanding unsecured subordinated floating rate debentures, Series
1 of the Company.
The Series 1 Debentures have a maturity date of
March 31, 2040 (the “Maturity Date”). The Series 1
Debentures will be issuable only in denominations of C$100 and
integral multiples thereof and, from and including the Issue Date
to but excluding March 31, 2024, will bear interest at a rate of
13.3% per annum (the “Current Rate”). From and
including March 31, 2024 to but excluding the Maturity Date, the
interest rate applicable to the Series 1 Debentures will be reset
on an annual basis on March 31 of each year, at a rate equal to the
annual average percentage change in the All-items Consumer Price
Index during the 12 month period ending on December 31 in the prior
year (which amount may be positive or negative) plus 6.5% (the
“Floating Interest Rate”). Notwithstanding the
foregoing, the interest rate applicable to the Series 1 Debentures
will not be less than 0%. Interest, if any, will be payable
quarterly in arrears in equal instalments on March 31, June 30,
September 30 and December 31 in each year. The Current Rate will
only apply to the Series 1 Debentures in respect of the interest
payments up to and including March 31, 2024. Effective March 31,
2024, the interest rate payable on the Series 1 Debentures will be
based on the applicable Floating Interest Rate.
All payments in respect of the Series 1
Debentures will be subordinated in right of payment to the prior
payment in full of all senior indebtedness of the Company, which
includes the Credit Facility.
The Rights will be exercisable until 4:30 p.m.
(Toronto time) (the “Expiry Time”) on September
29, 2023 (the “Expiry Date”) at a price of C$133
per C$100 principal amount of Series 1 Debentures purchased, plus
accrued interest in the amount of C$0.217 per C$100 principal
amount of Series 1 Debentures purchased on account of interest
accrued on the Series 1 Debentures from, and including, September
30, 2023 to, but excluding the Issue Date. Rights not fully
exercised prior to the Expiry Time on the Expiry Date will be void
and of no further value.
The Rights will be listed on the Toronto Stock
Exchange (the “TSX”) under the symbol “CSU.RT” and
will be posted for trading on the TSX until 12:00 p.m. (Toronto
time) on the Expiry Date, at which time they will be halted from
trading. The TSX has approved the listing of the Rights and the
Series 1 Debentures, subject to the Company fulfilling all of the
requirements of the TSX.
A copy of the Final Prospectus and, in the case
of eligible Shareholders, statements issued under the Computershare
Direct Registration System, accompanied by rights subscription
forms representing the Rights to which they are entitled, will be
mailed to registered Shareholders following the Record Date.
Registered Shareholders wishing to exercise their Rights must
forward the completed rights subscription forms along with the
applicable subscription proceeds to Computershare Trust Company of
Canada by no later than the Expiry Time. Shareholders who hold
their Common Shares through an intermediary will receive materials
and instructions from their intermediary.
Further details regarding the Rights Offering
and the Series 1 Debentures can be found in the Final Prospectus
which has been filed on SEDAR+ at www.sedarplus.ca and on EDGAR at
www.sec.gov, and is available on the Company’s website at
https://www.csisoftware.com/category/stat-filings. Alternatively,
copies of the Final Prospectus may be obtained by contacting Jamal
Baksh at 20 Adelaide Street East, Suite 1200, Toronto, Ontario, M5C
2T6 or by calling 416-861-9677. This press release does not
constitute an offer to sell, or the solicitation of an offer to
buy, any securities of the Company.
Forward Looking Statements
The statements contained in this press release
which are not historical facts are forward-looking statements,
which involve risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the
Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Words such as “may”, “will”, “expect”,
“believe”, “plan”, “intend”, “should”, “anticipate” and other
similar terminology are intended to identify forward-looking
statements. These statements reflect current assumptions and
expectations regarding future events and speak only as of the date
of this press release. Forward-looking statements involve
significant risks and uncertainties, should not be read as
guarantees of future performance or results, and will not
necessarily be accurate indications of whether or not such results
will be achieved. A number of factors could cause actual results to
vary significantly from the results discussed in the
forward-looking statements.
About Constellation Software
Inc.
The Common Shares are listed on the TSX under
the symbol “CSU”. The currently outstanding unsecured subordinated
floating rate debentures, Series 1 of the Company are listed on the
TSX under the symbol “CSU.DB”. The Company acquires, manages and
builds vertical market software businesses.
For further information please
contact:
Jamal Baksh Chief Financial Officer 416-861-9677
info@csisoftware.com www.csisoftware.com
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