Broker network to focus on core mortgage business after repaying all legacy debt
Dominion Lending Centres Group (DLCG) has struck a deal with KayMaur Holdings to acquire all outstanding non-voting preferred shares as DLCG shifts its focus away from managing legacy assets and toward its core mortgage brokerage business.
The mortgage corporation will buy back the preferred shares from KayMaur and other minority shareholders in a deal worth $137 million, which will be paid through $122 million in common shares and $15 million in cash.
The preferred shares, originally created during DLCG's 2020 restructuring, were designed to help the company separate its core mortgage operations from other non-essential assets. However, with all non-core assets sold off and associated debts fully repaid, the preferred shares are now considered redundant.
“The creation of the preferred shares were fundamental to Chris [Kayat, DLCG co-founder] and I proceeding with the 2020 reorganization,” DLCG chairman Gary Mauris explained. “However, since that time, the corporation has disposed of the non-core assets and retired all related debt. Further, we have received considerable feedback from many market participants that they found DLCG’s capital structure and financial reporting to be overly complicated.
“While the preferred shares served the corporation well for a transitional period, we understand that the time has come to simplify the corporation’s capital structure and have one class of common shares.”
In addition to the share buyback, DLCG will amend its articles of incorporation to eliminate preferred shares entirely, leaving common shares as the sole class of equity. This step is intended to create a cleaner and more straightforward capital structure.
“[DLCG] desires to have simpler capital structure with one class of equity, the common shares,” DLCG independent lead director Trevor Bruno said in a press release. “We believe the proposed acquisition will enable shareholders and market participants to better understand the corporation’s financial performance going forward, will better align the corporation’s financial reporting with other Canadian public companies and will allow the corporation to more effectively manage its cash flow.”
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The deal still needs approval from DLCG shareholders, with a vote scheduled for later this year. If the transaction goes through, DLCG will operate solely with common shares, of which around 60% will be held by KayMaur Holdings, the investment firm controlled by Mauris and Kayat.
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