Reasons for Rejecting the Offer
The C.A. Bancorp Board UNANIMOUSLY recommends that Shareholders REJECT and NOT TENDER their Common Shares to the inadequate and opportunistic Maxam Offer that substantially undervalues the assets and business of C.A. Bancorp.
Reasons for Rejection:
- The Maxam Offer is inadequate, as it significantly undervalues C.A. Bancorp’s assets and business.
- Maxam’s offer price represents a 49.9% discount to net asset value as of September 30, 2009.
- C.A. Bancorp’s cash, public investments (including Charter REIT and C.A. Bancorp Canadian Realty Finance Corporation) and marketable securities alone have an aggregate value of $1.03 per Common Share.
- Maxam’s offer materially undervalues C.A. Bancorp’s private investment portfolio, which has achieved an implied IRR of approximately 20% from inception to September 30, 2009.
- Additionally, Maxam’s offer does not reflect the value of C.A. Bancorp’s other assets, such as its management agreements, regulatory licences and tax loss carryforwards.
- CIBC, C.A. Bancorp’s independent financial advisor, has delivered a written opinion dated December 21, 2009 (the “Opinion”) stating that, as of such date and based upon and subject to the assumptions, limitations and qualifications set forth therein, the consideration offered by Maxam to Shareholders pursuant to the Maxam Offer is inadequate, from a financial point of view, to Shareholders.
- The timing of the Maxam Offer is opportunistic and is prejudicial to C.A. Bancorp and its Shareholders.
- Maxam’s offer attempts to take advantage of C.A. Bancorp’s temporarily depressed share price.
- C.A. Bancorp recently completed the internalization of its administration and management functions, which is only starting to benefit C.A. Bancorp and its Shareholders.
- C.A. Bancorp enjoys a very solid financial position, with virtually no long-term debt or capital lease obligations and minimal other long-term obligations.
- Maxam’s offer has been made during the winter holiday season and is only open for acceptance for the legal minimum of 35 days, denying Shareholders the opportunity to make a reasoned and informed decision.
- The Board of Directors has initiated a process under which superior proposals, delivering greater value for Shareholders, may emerge.
- Maxam’s offer is extremely conditional, to the point where it is not a firm offer.
- Maxam’s offer is at a discount to current trading prices. Maxam itself has made purchases since the announcement of its offer at a premium to the offer price.
For a more detailed explanation of these “Reasons for Rejection”, please see pages 3 - 10 in the Directors’ Circular.