Saturday, November 3, 2007

New article in National Post raises questions about Privatization

I would encourage everybody to take a look at a new article written in the National Post concerning the privatization deal. You can get the full article here.
The article is by Barry Critchley

Here are some excerpts:

"none of the retail shareholders he has contacted is pleased with the deal. In his view, Viceroy's breakup value, even without the Russian deal and clientele, exceeds $7 a share.

"They have no debt, have good technology which requires better management, and own significant assets, including land purchased more than 50 years ago and carried on the balance sheet at cost," he said.

For the rest of the shareholders, their objections include this query:

If the deal is so good for the public shareholders -- at the time, the offer was described as a 37% premium to the recent trading price-- why aren't management shareholders selling?

It's unusual for a company to be privatized and for the insiders to continue to hold stock.

The no-selling by the insiders -- some of whom started the company more than 50 years ago -- led McVety to wonder, what is the real game plan? In his view, it is nothing more than a way for the holders of the class B shares to sell their stake to the Russians at a later date -- but for a higher price than $4.25 a share.

And those suspicions were heightened when William Simpson, Viceroy's chief financial officer, said that as a result of OPIN's investment, Viceroy hopes to gain a "bunch of business." If that does happen, no prizes for guessing which Viceroy shareholders will gain."


Again, I encourage everyone to read the complete article. It clearly states our concerns and shows exactly why we feel that if you vote for this deal, you are being swindled. The vast majority of the people I have spoken with are completely against this deal and we will be voting against it.

The true value of Viceroy Homes is considerably more than $4.25 per share, and we hope that by voting against the deal, we will ultimately be able to get a much better price.

Viceroy has a long history, and given the huge insider ownership, management has a strong interest in keeping this company profitable and viable. The privatization is a tactic to maximize their own wealth at the expense of regular shareholders. If management really wants to take the company private, they should be prepared to raise their bid to a fair price (at least $6 per class A share in my opinion)

Mario Rizzi

514 967 9827

1 comment:

sally ann cavanagh said...

If I remember correctly, didn't the company issue a new offering a few years ago for almost $10 per share. It's ridiculous that they are now trying to take it private at less than half that price.

I don't know about everyone else, but I bought the shares at a much higher price, and intend to vote against the buyout. Even if we lose this bid, the company is worth more than 4.25 a share...